To the extent that the years following the 2008 financial crisis have constituted a “crisis of capitalism,” it has not been because there is something fundamentally wrong with markets, but because the political class so often manipulates them to serve the interests of their powerful allies. From the auto bailout to government interference in the energy sector to Obamacare, Washington too often dresses up corporate collusion as a serious exercise in public policy.
So widespread has this trend become in recent years that even the Tea Party and Occupy Wall Street — two movements diametrically opposed to one another — have found common ground in criticizing the trend of crony capitalism.
Congress has the chance to begin reversing this pattern as it considers whether or not to reauthorize the Export-Import Bank, an institution that will see its charter expire in September. Like many of America’s worst ideas, the bank is a vestige of the New Deal era, set up to provide credit for overseas companies looking to purchase American goods. During the 2013 fiscal year, the bank authorized $27.3 billion in financing.
We’re second to no one in our support of free trade, and we believe that thriving international commerce is a vital component of a prosperous America. We see no reason, however, why taxpayers need to shoulder the risk attached to major corporations’ forays into foreign markets.
Defenders of the bank argue that its loans are low-risk and that its existence is necessary to secure financing that wouldn’t be forthcoming from the private sector. These arguments are irreconcilable. If the loans really are such reliable bets, there’s no reason to suppose that they couldn’t be provided on private markets. Conversely, if the market is shying away from them, then the underlying liability is greater than the bank’s apologists contend — and there’s no reason that taxpayers should be on the hook for it.
President Obama demonstrated admirable instincts during the 2008 presidential campaign, when he called the Export-Import Bank, “little more than a fund for corporate welfare,” a sentiment with which we agree. In 2012, however, he signed legislation reauthorizing the bank and increasing its financing cap by 40 percent. He’s been joined in this uncritical support by virtually all congressional Democrats and many congressional Republicans (a majority of whom voted to reauthorize the bank in 2012).
With news that House Budget Committee Chairman Paul Ryan and House Ways and Means Committee Chairman Jeb Hensarling are both urging their Republican colleagues not to reauthorize the bank, we’re hopeful that the consensus may be beginning to crack. That’s as it should be. The federal government needs to get out of the business of picking winners and losers in the marketplace.
— From the Orange County Register