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FOR
the longest time the US Export-Import Bank
has been the target of choice of people
want to cut the US Federal Government down
to size. Not because the Ex-IM Bank was
so bad, but because its would-be destroyers
felt they could get leftists on side to
wholeheartedly back its destruction. It's
role, after all, was to dispense soft loans
to "corporate welfare bums" to
use the parlance of the socialists.
One
hesitates to say that the US Export-Import
Bank is dead even now that a Republican
controlled Congress refused to reauthorise
it. One hesitates because we live in a world
when deadlines are not things that signal
the end of things, but only spawn new deadlines.
Like bankruptcies, they are no longer the
end of the story, but the turning the page
into Chapter 11. So it is better than even
money that the US Export-Import Bank will
rise again.
In
this we find ourselves with, rather than
against, Al Hunt, an erstwhile leftist opponent,
in joining him defending US Export-Import
Bank, which subsidises American exports,
but is also held up by congressional critics
as an example of crony capitalism.
Among
the companies lobbying to keep it going
were General Electric, whose revenue was
almost US$150 billion last year, with a
profit of $15 billion.
As
liberal commentator Al Hunt points out,
it was started by Franklin D Roosevelt,
to provide direct loans and loan guarantees
at low interest rates to foreign entities
to buy American products. This makes it
something of a lesser shrine of leftist
in the Rooseveltian pantheon of secular
deities. Many countries require its kind
of financial support as a condition for
importing American goods, and in many cases
these are transactions that private banks
won't undertake.
Most
other nations have export credit agencies
and some, especially China, are much more
aggressive about selling abroad than the
United States. Less dramatically Canada
has Export Development Canada, which has
yet to arouse controversy, but does the
same thing in much the same way.
Last
year, the US bank returned $675 million
to the United States Treasury, mostly from
the fees and interest it charges on loans.
The deals it underwrote helped create more
than 160,000 jobs. The default rate was
less than one per cent. That is to say cronies
tend to be reliable bill payers, unlike
the needy darlings of the left, always wanting
and needing things.
Critics
contend that a big chunk of Ex-Im's lending
goes to a few large companies such as Boeing
and GE There is some truth to that, though
US Commerce Secretary Penny Pritzker says,
"They're forgetting about the supply
chains, the thousands of small- and medium-size
companies that benefit." GE gets Ex-Im
Bank assistance for projects such as locomotives
for Angola or a water project for Cameroon,
which are among the dozens of countries
that require export credit funding, and
where private financing wouldn't be available.
Which
is all well and good. But while the destruction
of the Ex-Im Bank was a bad choice, it is
clear that many baroque and rococco extentions
of the US bureaucracy can well do with a
haircut. The problem is that many an ox
will be gored in the process and the howls
of protest will ring throughout the land.
One only need to look at Greece, where a
great many, perhaps most voters, believe
that they deserve to live beyond their means
if they democratically vote to do so.
Such
notions must to be promptly disabused. So
while the quest to cut the US Federal Government
down to siize was a worthy one, the choice
of a the Ex-Im Bank was not. It is too useful
tool to discard.
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