WASHINGTON \u2014 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\u2019s revival of the Export-Import Bank is a redundant reminder that the rhetorical discord between the parties exaggerates their actual differences.<\/p>\n
The Ex-Im bank has been reauthorized 16 times since it was created in 1934 as a filigree on the New Deal\u2019s overarching project of politicizing the allocation of financial resources. The reauthorization requirement is a way of pretending to refute Ronald Reagan\u2019s axiom that there is nothing as immortal as a temporary government program, because programs acquire \u201creliance interests\u201d the way a ship acquires barnacles.<\/p>\n
Between 2015 and the Senate\u2019s 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\u2019s share of benefits from Ex-Im\u2019s subsidies of foreign entities. The theory has been slain by many facts.<\/p>\n
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% \u2014 and exports have risen.<\/p>\n
Ex-Im has prudently distributed subsidies to enough small businesses to blur its (accurate) reputation as primarily an ally of corporate behemoths such as General Electric, John Deere, Caterpillar and especially Boeing. Sen. Mike Lee, R-Utah, who opposes Ex-Im, notes, \u201cWhen Ex-Im financing was at its peak, Boeing received 70 percent of all \u2026 loan guarantees and 40 percent of all Ex-Im dollars.\u201d In 2018, deprived of subsidized Ex-Im loans, Boeing, America\u2019s 23rd largest corporation by market capitalization ($193.58 billion as of Tuesday morning), and 27th by revenue ($101 billion), had its best year ever.<\/p>\n
Of course, Ex-Im makes enough loans to small businesses (in 2014 about 25% of Ex-Im dollars went to 0.5% of small businesses) to purchase congressional support in the usual way: Want to build a bomber that the military does not want? Scatter subcontractors around enough congressional districts, and it will be built.<\/p>\n
Lee says: \u201cThe No. 1 buyer of exports subsidized by Ex-Im between 2007 and 2013 was Pemex \u2026 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. \u2026 During the same period, Ex-Im backed $3.4 billion in financing to Emirates Airlines \u2014 a company wholly owned by the government of Dubai \u2014 for Emirates\u2019 purchase of Boeing planes.\u201d Sen. Pat Toomey, R-Pa., identifies the second- through fifth-biggest beneficiaries of Ex-Im subsidies: (2) State-owned Kenya Airways, (3) State-owned Air China, (4) Russia\u2019s 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\u2019s richest woman, a multibillionaire.<\/p>\n
The Trump administration trots out its usual rationale for economic irrationality: Ex-Im is a \u201cnational security weapon.\u201d As the bank subsidizes China and Russia? In 2014, in 17 Ex-Im transactions the primary borrower was the Export-Import Bank of China. Says Toomey, \u201cYou cannot make this stuff up\u201d: Ex-Im is subsidizing the Chinese bank that is cited as the reason we need Ex-Im.<\/p>\n
Toomey notes that Ex-Im\u2019s defenders argue that the bank takes risks that private lenders will not undertake \u2014 and that the bank does not risk taxpayers\u2019 money by making unsafe loans. By picking some U.S. winners, Ex-Im makes some U.S. losers: For example, it subsidizes state-owned Air India\u2019s purchase of Boeing jets, thereby enabling it to lower its fares on the New York-Mumbai route, where it competes against Delta Airlines.<\/p>\n
Ex-Im, which exists to allocate credit by political criteria rather than the market\u2019s efficiency criterion, is opposed by only 16 Republican senators \u2014 call them The Remnant \u2014 who, unlike their 37 Republican colleagues, mean what they say when praising free markets and limited government: Barrasso, Blackburn, Braun, Cruz, Daines, Grassley, Hawley, Inhofe, Kennedy, Lankford, Lee, Rubio, Sasse, Shelby, Toomey, Young.<\/p>\n
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.<\/p>\n
George Will\u2019s email address is georgewill@washpost.com<\/a>.<\/p>\n