George Will: Ex-Im bank & the essence of socialism
Briefly suspending their warnings about the rising tide of socialism, a large majority of Senate Republicans recently joined with almost all their Democratic colleagues in affirming the essence of socialism, which is government allocation of capital. The Senate’s revival of the Export-Import Bank is a redundant reminder that the rhetorical discord between the parties exaggerates their actual differences.
The Ex-Im Bank has been reauthorized 16 times since it was created in 1934 as a filigree on the New Deal’s overarching project of politicizing the allocation of financial resources. The reauthorization requirement is a way of pretending to refute Ronald Reagan’s axiom that there is nothing as immortal as a temporary government program because programs acquire “reliance interests” the way a ship acquires barnacles.
Between 2015 and the Senate’s recent confirmation of three board members, Ex-Im has been without a quorum and hence unable to approve guarantees of large loans (those over $10 million). So, we have had a sustained test of the theory that Ex-Im is vital to U.S. exporting in general, and to the few giant corporations that get the lion’s share of benefits from Ex-Im’s subsidies of foreign entities. The theory has been slain by many facts.
Ex-Im has always been peripheral to U.S. exporting. In the four years since Ex-Im became largely dormant, the portion of American exports it subsidized fell from less than 2% to 0.3% — and exports have risen.
Ex-Im has prudently distributed subsidies to enough small businesses to blur its (accurate) reputation as primarily an ally of corporate behemoths. Sen. Mike Lee, R-Utah, who opposes Ex-Im, notes, “When Ex-Im financing was at its peak, Boeing received 70% of all … loan guarantees and 40% of all Ex-Im dollars.” In 2018, deprived of subsidized Ex-Im loans, Boeing, America’s 23rd largest corporation by market capitalization ($193.58 billion as of Tuesday morning), and 27th by revenue ($101 billion), had its best year ever.
Lee says: “The No. 1 buyer of exports subsidized by Ex-Im between 2007 and 2013 was Pemex … the notoriously corrupt petroleum company owned by the Mexican government. Pemex, which has a market cap of $416 billion, received more than $7 billion in loans backed by U.S. taxpayers. … During the same period, Ex-Im backed $3.4 billion in financing to Emirates Airlines — a company wholly owned by the government of Dubai — for Emirates’ purchase of Boeing planes.”
Sen. Pat Toomey, R-Lehigh Valley, identifies the second- through fifth-biggest beneficiaries of Ex-Im subsidies: (2) State-owned Kenya Airways, (3) State-owned Air China, (4) Russia’s state-owned bank VEB (currently under U.S. sanctions for bad behavior; two hands of the U.S. government, one caressing, one smiting), (5) Roy Hill mining, owned by Australia’s richest woman, a multibillionaire.
Ex-Im, which exists to allocate credit by political criteria rather than the market’s efficiency criterion, is opposed by only 16 Republican senators — call them The Remnant — who, unlike their 37 Republican colleagues, mean what they say when praising free markets and limited government.
Republicans must repeat this dismally revealing exercise by Sept. 30, when the bank must be reauthorized, which it will be. So, the 37 have three months in which to resume their denunciations of socialism, with which they are familiar.
George Will is a columnist for The Washington Post and can be reached via email.