House Republicans have finally accepted that controlling one half of one third of the federal government does not give them the right to impose their policy agenda on the country. Debt ceiling showdowns are behind us, for now. It looks unlikely that the House GOP will force another government shutdown in the coming months. But conservative Republicans have settled on one piece of “crony capitalism” to extinguish this year: the Export-Import (Ex-Im) bank. It’s one battle they may actually win.
The 80-year-old bank provides financing to foreign companies to purchase American exports at below average interest rates. Supporters of the bank argue that without these loans, foreign firms would be unable to buy certain American goods, like a Boeing 747. Thus, the Ex-Im bank creates jobs. But these sorts of subsidies violate the principles of free trade, though it doesn't stop governments in other countries from taking such action. For that reason, conservatives have decided to refuse to reauthorize the bank after its charter expires this year. And in the past two weeks, they have received two pieces of good news in that quest.
The first start was Eric Cantor’s upset defeat to conservative David Brat. Cantor was a big supporter of the bank. In fact, on the day following Cantor’s loss, Boeing’s stock price dropped 2 percent, because investors correctly feared that the defeat put the Ex-Im bank’s reauthorization in serious jeopardy. In fact, Brat’s victory may already be making an impact in Congress. Over the weekend, Kevin McCarthy, Cantor’s successor as Majority Leader, announced his opposition to the Ex-Im bank, even though he had voted to reauthorize it in 2012. Even House Speaker John Boehner has not offered his support.Want to keep up with the latest policy news? Subscribe to QEDaily
Then on Monday, the Wall Street Journal reported that the bank had suspended or removed four bank officials over the past few months “amid investigations into allegations of gifts and kickbacks, as well as attempts to steer federal contracts to favored companies.” These are serious allegations. They would confirm conservative arguments against the bank: It’s worse than crony capitalism. It’s outright bribery.
Already liberals are unsure about whether to support the bank or not. In the New York Times, Joe Nocera professed his support for the bank. But Jared Bernstein, the former chief economist for Vice President Joe Biden, was less sure. At his blog, he noted the benefits of the bank, but also explained that “the Brat’s of the world [sic] have a point in that for politicians to pretend otherwise, invoking red-meat slogans like ‘free trade,’ ‘the government doesn’t create jobs,’ ‘the government doesn’t pick winners,’ and then support institutions like the XMB is nonsensical.” Ultimately, the Ex-Im bank does pick winners and losers.
That’s where the investigations reported by the Wall Street Journal become so damaging: If they prove true, then officials are choosing winners and losers based on kickbacks. And that should make the decision easy for liberals: Join with conservatives and oppose the reauthorization of the Export-Import bank.