On Wednesday, May 9, these same Republicans face a moment of truth when they will have to decide if they truly are against crony capitalism or if they are only against Obama’s morphed version of venture socialism.
The Export-Import Bank is up for re-authorization and the Republican-controlled House of Representatives will vote on whether to re-authorize it and provide an additional $40 billion to lend to foreign customers of U.S. corporations.
This New Deal relic was initially conceived as a means to make loans to Stalin’s Soviet Union, it became a stand-alone agency within the federal government. The modern concept behind the Ex-Im Bank is that by providing low cost or guaranteed loans for foreign purchasers of U.S. corporation products, jobs are created in the U.S. due to those increased sales.
The reality is a little bit different. Delta Airlines revealed that Ex-Im loans to one of its foreign competitors was causing the Atlanta, Georgia based airline to cut international routes due to the unfair competition created against it. Unfair competition created by their very own government.
Perhaps even more disturbing is the story of how Obama Administration favorite and now bankrupt Solyndra was able to get an Ex-Im guaranteed bank loan to fund one of its customers in Belgium to put solar panels on their roof.
A federal government that is notoriously slow and inept in making decisions managed to make the Solyndra applied for loan guarantee in just 41 days. One wonders how a multi-million dollar loan decision went from initial application to money out the door so fast unless it had a little political grease to make it happen.
The loan guarantee, as in the Solyndra Belgian project, is particularly insidious as it takes the risk out of the loan for the originator and puts it directly on the back of the American taxpayer. If the foreign customer defaults, the U.S. taxpayer gets stuck with the tab.
When you take the risk out of the decision on whether a project is risk-worthy by putting a U.S. government guarantee behind it, the only thing you are guaranteed are risky loans that are bound to default ala the FannieMae/Freddie Mac housing loan scandal.
All this in the name of promoting Administration favored companies.
Ironically, the biggest pig at the Ex-Im Bank trough has been the Boeing Corporation, which sucked up $8.4 billion in loan guarantees or 90 percent of the total, in federal fiscal year 2009, and another $6.4 billion or 63 percent in 2010.
In fact, some have taken to call Ex-Im, the unofficial bank of Boeing, their use of the bank is so pervasive. Meanwhile the loan guarantees offered to Boeing’s customers around the world have lowered their cost of new equipment, while U.S. based carriers are ineligible for the exact same loans our U.S. government makes to their competitors abroad.
In an international economy, the Ex-Im Bank directly skews the playing field away from U.S. corporations attempting to compete against foreign loan beneficiaries, and that is ultimately the perverse impact of this well intentioned, but misguided program.
At a time when House Republicans have been particularly vocal against the federal government picking winners and losers, it would be the height of hypocrisy for them to turn around the reauthorized the Ex-Im Bank, whose sole existence is to do just that.
On Wednesday, when they vote, America will learn which members of Congress are legitimately outraged about the Solyndra-like foibles of this Administration, and who is just playing politics.
Who knew that a dry subject like the Export-Import Bank could end up being a moment of truth for so many members of the House of Representatives?
Rick Manning is the Communications Director for Americans for Limited Government.