Submitted by Mike Krieger of Liberty Blitzkrieg blog [10],
The Export-Import bank isn’t a big issue for me. In fact, I’ve barely given it much thought at all over the years. The reason I’ve decided to write on it today is because the federally backed bank, which has been around since 1934, faces a very serious threat to its survival.
I think the most important aspect of this entire fight is the fact that on opposite sides of the debate are not Democrats versus Republicans, but once again Republicans vs. Republicans (as in the Dave Brat vs. Eric Cantor race [11]). We again see tea party Republicans facing off against establishment RINOs. On one side we hear claims by the tea party wing that the Ex-Im merely serves as a conduit for crony capitalism and favoritism to large corporations, or those willing to bribe officials. On the other side, we see establishment Republicans, who are extremely cozy with mega-corporations, maintaing that the institution plays a crucial role in financing American exports to make them competitive.
As longtime readers know, I subscribe to the generational cycle work of Neil Howe and William Strauss, which maintains we are in the midst of what they call a Fourth-Turning. [12] In a Fourth-Turning you essentially experience a massive paradigm shift. All of the institutions we knew our entire lives get washed away or changed dramatically. The battle against the Ex-Im bank, a 80 year old institution, is just another example of the sort of changes that happen in Fourth-Turnings. [13] The civil war within the Republican Party and the emergence of Bitcoin and crypto-currencies are others. The signs of tremendous change are everywhere.
So here’s some background on what’s going on from The Hill [14]:
With Rep. Steve Scalise (R-La.) — an Ex-Im critic during the 2012 battle — jumping into the majority whip post, supporters of the bank say a divided GOP leadership is unlikely to push for a longterm renewal of the bank’s charter, which expires Sept. 30.
Neither the Senate nor the House have yet to produce a reauthorization bill. Without a bill, the bank will cease doing business.
The federally backed bank, established in 1934, helps finance American businesses’ foreign sales. Supporters say Ex-Im is needed to help U.S. companies stay competitive in foreign markets. Critics say it’s corporate welfare designed to pump money for big business.
As part of his bid to become majority leader, McCarthy told his Republican colleagues in a closed-door meeting that he wouldn’t overstep Hensarling on Ex-Im — a major blow to the bank’s future. The bank expires if the House doesn’t produce a bill to reauthorize it, and Hensarling’s committee has jurisdiction on the issue.
Hensarling has been one of Congress’s most vocal opponents of the bank, which tea party conservatives have criticized as “cronyism” and “corporate welfare.” The 2012 reauthorization bill passed 330-93, eight not voting and no Democrats opposing the legislation.
Tea party groups and their allies in Congress are now in a full-fledged policy war against Ex-Im supporters, such as The Financial Services Roundtable, The Coalition for Employment Through Exports, and The Chamber of Commerce.
Sens. Joe Manchin (D-W.V.) and Mark Kirk (R-Ill.) are working on a reauthorization bill in the Senate, but it’s unclear who on the House Financial Services Committee will buck Hensarling and propose a bill of their own, according to sources familiar with the issue.
In case you don’t recall who Sen. Joe Manchin is, he’s the putz who suggested banning Bitcoin earlier this year. Back in February, he wrote a letter stating:
Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.
I covered that sad story in my post: U.S. Senator Wants to Ban Bitcoin – To be Followed by Book Burnings and Witch Hunts. [15] Now, back to The Hill…
Choosing to support or oppose Ex-Im could prove a thorny issue for Republicans who are up for reelection, forcing them to pick sides between the establishment GOP and the more conservative tea party.
“Our mission is not to make Republicans happy or to get Republicans elected, it’s to fight for free market principles,” AFP’s Russell said.
Hensarling is set to chair a hearing on the issue Wednesday, in which Ex-Im Chairman Fred P. Hochberg is slated to testify.
Throwing another wrench into an already dramatic political fight, is this morning’s report from The Wall Street Journal [16]about several officials at the Ex-Im bank being suspended for corruption charges. This just provides further ammunition for those who want to get rid of the thing. From the WSJ:
The U.S. Export-Import Bank has suspended or removed four officials in recent months amid investigations into allegations of gifts and kickbacks, as well as attempts to steer federal contracts to favored companies, several people familiar with the matter said.
One employee, Johnny Gutierrez, an official in the short-term trade finance division, allegedly accepted cash payments in exchange for trying to help a Florida company obtain U.S. government financing to export construction equipment to Latin America, according to a person familiar with the inquiry. Mr. Gutierrez was escorted from the Ex-Im Bank building in April, said two people familiar with the matter.
Of the four employees, Mr. Gutierrez’s responsibilities were most central to the agency’s core mission of financing exports. Two of the others are being investigated over allegations of improperly awarding contracts to help run the agency; the third is being investigated over allegations of accepting gifts on behalf of a company seeking financing, according to people familiar with the matter. The identities of the three couldn’t be fully corroborated.
The internal investigations come at a pivotal time for the agency. Congress is considering whether to reauthorize the 80-year-old federal trade-finance agency, and two of the top three House Republican leaders now say they won’t agree to authorize the agency’s charter after it expires in September. The allegations of misconduct could complicate an already difficult political environment for those who support the agency’s reauthorization. The Export-Import Bank changed how it disclosed financing deals in 2010 and no longer discloses all the small business loans it originates. An agency spokesman wouldn’t comment on the agency’s recent involvement with Impex, though it has backed Impex deals through at least 2011.As usual, total disclosure for the plebs, no disclosure for them.The agency operates on borrowed money from the Treasury Department, which it pays interest on. It uses that money for direct loans or loan guarantees. In fiscal 2013, the agency authorized $27 billion to support an estimated $37.4 billion in U.S. export sales. It also sent $1.06 billion to the U.S. Treasury, money it earned from interest and fees
So what does Barack Obama think of the Export-Import bank? As usual, it depends on who you ask, Presidential-candidate Obama, or President-elect Obama. Candidate Obama was pretty clear about his position while campaigning in 2008, calling it “little more than a fund for corporate welfare.”
See for yourself in the video below:
Of course that didn’t stop him from signing the reauthorization in 2012 and raising its lending authority by 40%. [17] What a joke.
