I have recently traveled from New York to California talking to audiences from the left, right and middle about my new book, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State. The topic has been how activists from both the right and left side of the political spectrum can come together to bring about long-overdue changes in America. With the current “Do-Nothing” Congress halting progress on many important issues, there is much skepticism in America about political rivals coming together in support of common goals. But a major issue that could create unlikely allies is now coming to a head on Capitol Hill.
As a September 30 deadline looms, Congress must decide on whether or not to reauthorize the controversial Export-Import Bank. Established in 1934 by an Executive Order from President Franklin Delano Roosevelt, the Ex-Im bank provides credit to domestic exporters and foreign importers to the U.S. The Ex-Im bank has long been accused of being little more than a corporate welfare fund, mostly for Big Business, by outspoken progressives and conservatives.
In short, the function of Ex-Im is to subsidize businesses that export American products. The major problem with this agency comes from the fact that a big bulk of Ex-Im funds go to huge, wealthy companies, such as the Ex-Im’s largest beneficiary Boeing, which in 2013 received 30 percent of its loans and guarantees. Ex-Im defenders argue that the majority of its loans go to small businesses that cannot secure financing in the private market, conveniently ignoring the crucial fact that the majority of the money goes to big businesses such as the aforementioned Boeing, as well as other giant corporations like General Electric (10 percent of Ex-Im loans and guarantees in 2013) and Caterpillar (approximately 5 percent).
Economist Dean Baker, a leading voice on the left against the reauthorization of the Export-Import, puts it best:
“If the bank backs $80 billion in loans for Boeing, General Electric, or Enron (a favorite in past days), and $20 billion for small businesses, it doesn’t matter that the $20 billion in small business loans accounted for the bulk of the transactions. Most of the money went to big businesses. That is what matters and everyone touting the share of small business loans knows it.”
It’s also important to note that the Ex-Im Bank is involved in only 2 percent of U.S. exports — the other 98 percent function just fine without its largesse. Thus the expiration of the Ex-Im would mainly affect the profit margins of a handful of big corporations.
Robert Weissman of Public Citizen explained: “Ex-Im puts the federal government in a role which ought to be filled by private lenders and insurers. It forces taxpayers to bear the risk that should be absorbed by business.”
Eighty years after its creation, the Ex-Im Bank’s stated mission of boosting American jobs is questionable, at best. And, the Ex-Im’s general lack of transparency and a growing list of allegations of fraud and corruption (as in the recent headlines regarding four Ex-Im officials accepting kickbacks) are additional red flags.
The Ex-Im reauthorization efforts have the predictable support of the U.S. Chamber of Commerce, the National Association of Manufacturers and many prominent Democrats and Republicans — some of whom have changed their tunes over the years. Dean Baker writes that the prospect of ending Ex-Im “prompted the most hysteria among the Washington elite since the financial crisis threatened to lay waste to Wall Street following the collapse of Lehman. As we know, when major companies have their profits on the line, the pundits get worried and truth goes flying out the window.”
Baker also criticizes GE CEO Jeffrey Immelt, who recently claimed it was “just wrong” for him to have to arduously make a case for the reauthorization of the Ex-Im. Baker notes that Immelt, who makes $25 million a year, has advocated cutting Social Security and Medicare benefits.
The elimination of the Ex-Im Bank was once a decidedly progressive cause. Senator Bernie Sanders (I-VT) was once extremely outspoken on Ex-Im — in 2002 calling it“corporate welfare at its worst” and writing that, “American citizens have better things to do with their money than support an agency that provides welfare for corporations that could care less about American workers.”
Nowadays, Senator Sanders is strangely silent in public on the matter of reauthorization, although he remains opposed to it.
This past July, 29 state governors sent a letter to Congressional leaders expressing their support for reauthorization — 20 Democrats and 9 Republicans. Republican Texas Governor Rick Perry and Republican South Carolina Governor Nikki Haley also expressed their crony capitalistic support of reauthorizing the Ex-Im.
From the Democratic quarters, former President Bill Clinton said during a recent panel at the U.S.-Africa Business Forum (alongside GE’s Jeffrey Immelt) that attacks on the Ex-Im were “ridiculous.”
“Economics is not theology. If you’re running a country, you’ve got to try to create an opportunity for all of your businesses to be competitive,” Clinton said.
Mr. Clinton declined to be more specific — but some of the very profitable companies using Ex-Im, such as GE and Boeing, contribute to his foundation.
During the 2008 election, then-Senator Barack Obama called the Export-Import bank, “Little more than a fund for corporate welfare.” Today, President Obama tells a very different story.
He revised his beliefs at a recent news conference:
“For some reason, right now the House Republicans have decided that we shouldn’t do this, [reauthorize the Ex-Im bank] which means that when American companies go overseas and they’re trying to close a sale on selling Boeing planes, for example, or a GE turbine or some other American product that has all kinds of subcontractors behind it and is creating all kinds of jobs and all of sorts of small businesses depend on that sale…we may lose that sale.”
Convergence works both ways, unfortunately — in this case, the political corporatists are aligning with Big Business interests. Dean Baker, a consistent voice of reason in a storm of hysteria, writes: “Just to remind everyone, the Export-Import Bank issues the overwhelming majority of its loans and guarantees to benefit a small number of huge corporations. It is a straightforward subsidy to these companies, giving them loans at below market interest rates.”
Moreover, many of these giant corporations, like General Electric and Boeing, pay little or no federal income tax on U.S.-based profits! (See Citizens for Tax Justice atctj.org.) Keep that in mind when General Electric CEO Jeffrey Immelt complains about having to defend his company’s lucrative corporate subsidy to its critics.
In a role-reversal of sorts, it is now the Tea Partiers who have taken to the ramparts to condemn what they refer to as the Ex-Im’s “crony capitalism.” The Tea Party influence is having great effect — the Ex-Im bank was last reauthorized in 2012 with the full support of then-Majority Leader Eric Cantor. Cantor was ousted from his seat earlier this year in a primary election by Tea Party candidate David Brat, who Cantor outspent 27 to one.
Cantor’s replacement, Congressman Kevin McCarthy (R-CA), has taken note of his predecessor’s missteps. McCarthy, who voted for reauthorization in 2012, recently told Fox News: “One of the biggest problems with government is they go and take hard-earned money so others do things that the private sector can do. That’s what the Ex-Im Bank does.”
Even Speaker John Boehner, who also previously voted for reauthorization, has backed off support.
In light of this new found common ground between left and right, where are the congressional leaders on the left who once shared a similar viewpoint on corporate welfare? Their silence is deafening. Rep. Alan Grayson (D-FL) is one of few Democrats who are still outspokenly opposed — even Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) have come out in support of the Ex-Im.
The Ex-Im bank situation presents a unique opportunity later this month to do something (ironically, through doing nothing) by letting the Ex-Im Bank’s charter expire for good.
Leaders in Congress must get over the “yuck factor” of working with their colleagues across the aisle and come together when such concurring occasions present themselves.
Ralph Nader’s latest book is: Unstoppable: the Emerging Left-Right Alliance to Dismantle the Corporate State.