SUMMER READING: EXPORT-IMPORT BANK

The Taxpayers Protection Alliance (TPA) has been keeping busy this August recess (unlike Congress) and for the last few weeks our Friday Summer Reading series has focused on issues that Congress must do more work on when they return for the brief time they have left this session. This week however, we’re switching things up by first featuring our Summer Reading a day early and secondly with a plea to Congress to do what they do best, nothing.  The issue is the Export-Import (Ex-Im) Bank and if Congress does nothing the authorization for the Ex-Im Bank will expire.

A recent op-ed by TPA, “The Final Countdown,” detailed how the bank’s days of US taxpayer-backing may be nearing an end:

September 30th is the day of reckoning for the Export-Import (Ex-Im) Bank because that is the day that the Bank’s authorization expires. And, as this day approaches, Ex-Im’s supporters will continue to grasp at every straw possible – no matter how thin – as they try to defend this flawed, outdated institution.  We can expect to see crony capitalists of all stripes come out of the woodwork to remind us why the Ex-Im Bank must be preserved at all costs.  Unfortunately for the Bank – but fortunately for the American taxpayer – the pro-Ex-Im arguments keep getting eviscerated one by one when forced to stand up to independent analysis.

The last part of that analysis is what has TPA and many of those involved in this debate very encouraged. The arguments that have been proffered by those looking to extend American taxpayers’ involvement in subsidizing the bank are crumbling at every turn. The bank has many defenders, but it is the critics of the Ex-Im Bank and its risk to taxpayers that are winning the debate. Tim Carney of the Washington Examiner has been out front exposing the corruption at the Ex-Im Bank while highlighting its lack of positive impact to taxpayers. In a recent piece, Mr. Carney pointed out that the bank’s reputation for ethical standards doesn’t even hold firm within the institution itself:

Only 42.1 percent of Ex-Im officials in a recent survey agreed that my organization’s leaders maintain high standards of honesty and integrity while 29.4 percent disagreed. Only 50.2 percent of Ex-Im employees agreed I can disclose a suspected violation of any law, rule, or regulation without fear of reprisal. The Inspector General in 2013 told Congress that Ex-Im suffers weaknesses in governance and internal controls for business operations.

The corruption inside the Ex-Im Bank is just one component of the many problems.  Another indefensible argument is the actual value that the bank is bringing in terms of trade and commerce. One of the leading critics (and experts) on this issue is Veronique De Rugy of the Mercatus Center at George Mason University. Veronique recently took to National Review to rebut Ex-Im Bank defender Sen. Judd Gregg (R-N.H.) to lay out a very basic fact about why Ex-Im does more harm than good:

Basic trade economics tells us that when a government subsidizes exports, either by providing cheap working capital to domestic companies or cheap loans to foreign ones, it generally raises the cost of domestic consumption and lowers the cost of foreign consumption. While Ex-Im Bank subsidies do help the tiny number of domestic and foreign companies, many of whom are lucky enough to have friends in Washington (we will soon see that Gregg thinks that’s a good thing), they hurt the millions of U.S. consumers and unsubsidized firms who lack Ex-Im connections.

TPA has been a vocal critic of the bank and eager to support efforts to bring awareness and education about the real problems the Bank poses for taxpayers and the economy. Earlier this year TPA joined other free market oriented organizations at a joint briefing on Capitol Hill to urge Congress to reject reauthorization of the Export-Import Bank. The coalition event, led by Americans for Prosperity, included other leading groups including The Heritage Foundation, Americans for Tax Reform, National Taxpayers Union, R Street Institute, Taxpayers for Commonsense, and many others. The event also showcased a coalition letter signed by more than 30 groups expressing opposition to any efforts to reauthorize the bank:

Not only does the Export-Import bank interfere with the free market, it also jeopardizes billions of taxpayer dollars. According to the Congressional Budget Office, the bank relies on obsolete accounting methods that significantly overstate its profits. When using a fair-value accounting analysis, a study by Massachusetts Institute of Technology concluded that the bank is actually losing $200 million a year. These risky loans and poor accounting practices are harmful to taxpayers, who are left footing the bill. In fact, taxpayers have already bailed out this bank once before at a cost of $3 billion.

The clock is definitely ticking on the Export-Import Bank and as time runs out it is good news for taxpayers. The bank’s risky loans subsidized by taxpayers is an all too familiar problem that ended in disaster for a housing market which is still struggling to get back to pre-recession levels. Congress has a lot of work to do in a little amount of time when they return from their summer recess, but for the Ex-Im Bank, they have just one task: to do absolutely nothing, which would be best for taxpayers and the economy.