At midnight, the gears of crony capitalism ground to a halt at 811 Vermont Avenue, NW, Washington, D.C.
After 81 years of funneling taxpayer dollars to favored companies, projects, and geopolitical outcomes under the guise of advancing some vague conception of the “U.S. economic interest,” the Export-Import Bank of the United States will end its financing operations at midnight tonight.
No more subsidies to Fortune 100 businesses. No more siphoning revenues from unwitting U.S. firms and industries. No more loan guarantees to wealthy, autocratic foreign governments. No more crowding out of private lending. No more taxpayer exposure to a Fannie Mae-like fiasco. No more bribery and corruption scandals. No more collaboration and lending to China’s Export-Import Bank – you know, the entity whose support for Chinese companies is alleged to threaten U.S. exporters and jobs, and is the most frequently cited imperative for reauthorizing Ex-Im.
No more of any of this… for now.
Champions of small government and market capitalism should savor this rare victory. It was won with solid arguments, including over 20 years of analyses from Cato Institute scholars including Ian Vasquez, Aaron Lukas, Steve Slivinsky, Chris Edwards, Doug Bandow, Sallie James, and – perhaps most comprehensively and tirelessly – Veronique de Rugy.
It was won because of columnist/scholar Tim Carney’s persistence in focusing the public’s attention on the corruption bred of corporate welfare and because of the analytical contributions of Heritage’s Diane Katz, the Competitive Enterprise Institute’s Ryan Young, and others who continued to make compelling arguments for shuttering the Bank, despite steep odds against that outcome.
It was won because certain libertarian groups and conservative activists made the issue a priority, recognizing that corporate welfare is as great a threat to liberty as is the Welfare State, and that reining it in should be a priority because success there would lend greater credibility to the effort to rein in the Welfare State.
It was won against great odds, including vast political expenditures and arm-twisting by U.S. business interests on Capitol Hill, a mainstream media that is reflexively unsympathetic to any cause associated with “Tea Party Types,” and a general aversion among establishment organizations to any challenges to the status-quo.
Radical and reckless, excessive and extreme, ideological and idiotic have been the characterizations assigned by media, politicians, and Boeing lobbyists in their attempts to discredit legitimate efforts to purge “crony” and make “market” the new brand of capitalism.
And it was won because House Financial Services Committee Chairman Jeb Hensarling and Senate Banking Committee Chairman Richard Shelby, knowing the case against Ex-Im reauthorization was more substantive than the New York Times would allow, made good gatekeepers by putting the onus on Ex-Im proponents to answer the critics – a task at which they failed.
So, at midnight, the Export-Import Bank ceased in its capacity to issue new financing. That is something to cheer. It may also be short-lived.
Proponents of the Bank have been regrouping and strategizing to move legislation to reauthorize the Bank at the soonest possible chance. In fact the White House is hosting a conference call for the purpose of advancing that outcome. Here’s the text of the email:
Please join us for a conference call on Tuesday, June 30th, at 2:35 PM with President Barack Obama, Senior Advisor to the President, Valerie Jarrett, and Director of the National Economic Council, Jeff Zients, to discuss the importance of reauthorizing the Export-Import Bank of the United States.
The Export-Import Bank is a critical tool to help U.S. businesses and workers succeed in global markets and grow their exports – it supports high-quality jobs, is a vital tool for small businesses, and doesn’t cost taxpayers a penny. Its reauthorization is vital to U.S. competitiveness and leveling the playing field for American small business owners and workers. …
This call is off the record and is not for press purposes nor amplification on social media.
The White House Business Council
The battle may be over but the war continues. Given the sway that conservatives have had on this issue, it will be interesting to see whether and how Speaker Boehner tries to circumvent Hensarling’s committee to get a reauthorization bill to the floor. Majority Leader McConnell believes there’s enough support in the Senate for reauthorization, but most of the Republican presidential hopefuls have expressed opposition to reauthorization.
It seems to me that if Ex-Im reauthorization resurfaces in the weeks and months ahead, it will be an issue that provides Republicans with yet another opportunity to demonstrate commitment to limited government, free market principles. Maybe this time they’ll see the value in reclaiming that brand.
Dan Ikenson is director of Cato’s Herbert A. Stiefel Center for Trade Policy Studies, where he coordinates and conducts research on all manners of international trade and investment policy.
EDITORS NOTE: A version of this post first appeared at Cato.org.