As the domino effect of Eric Cantor’s primary defeat ripples through the Republican hierarchy in the House of Representatives, incoming leaders are scrambling to build bridges to the GOP’s restive right wing. Apparently their strategy includes sacrificing the jobs of thousands of hardworking voters to ideological purity by opposing reauthorization of the Export-Import Bank.
Ex-Im, as it is often referred to by trade-policy wonks, is an 80-year-old agency that loans money to foreign buyers of U.S. goods. Some of those customers such as Pakistan and Ethiopia can’t tap private-sector financing because lenders fear the political risks involved. In other words, they fear they won’t get their money back due to instability. Ex-Im provides the necessary loans and guarantees for a fee. It costs more than just going to a commercial bank, but for customers excluded from market sources of financing it is a godsend. So they almost always pay back their loans on time; in fact, Ex-Im’s default rate is lower than that of most commercial banks.
In the process of providing this useful service — just as export-credit agencies do in five dozen other countries — Ex-Im sustains hundreds of thousands of U.S. manufacturing jobs. The workers in those jobs make planes, locomotives, construction equipment, energy technology and other items that foreign buyers want, but would be unable to finance without Ex-Im’s help.
So here’s the bottom line on Ex-Im: it doesn’t compete with the private sector, it doesn’t use taxpayer funding, it sustains hundreds of thousands of jobs, and it helps U.S. manufacturers to stay competitive in an unforgiving global economy. Did I mention it turned over a billion dollars to the Treasury last year in fees it collected but didn’t need to sustain operations?
Well, that’s not good enough for some ideological purists in the House GOP, who have decided Ex-Im distorts market forces. With 60 other export-credit agencies around the world doing the same thing — many of them in far less restrained fashion than Ex-Im — you’d think it was obvious that the bank is more in the business of leveling the playing field than upsetting it, but ideologues seldom seem to notice what’s happening beyond U.S. borders. So when Ex-Im comes up for reauthorization later this year, the radicals want to shut it down. And now they have two newly-elected GOP leaders in the House on their side — Majority Leader Kevin McCarthy and Majority Whip Steve Scalise.
The sudden discovery by right-wing radicals that Ex-Im Bank is an evil force in the marketplace after eight decades of bipartisan support is alot like the sudden discovery by left-wing radicals that global warming is a threat to civilization. It endangers economic growth and job creation in order to pursue the dictates of a fashionable theory. This is the kind of political movement that crushes the dreams of little people as political players maneuver for advantage in remote capitals. And that’s precisely what shutting down Ex-Im would do.
Let’s be honest about what’s going on here. In a bid to mollify the party’s unpredictable right wing, newly-appointed House GOP leaders have decided to sacrifice a little agency and all the little people’s livelihoods that depend on that agency’s activities. You can tell from listening to their public comments on the bank that they don’t really care about the facts, because they keep saying things that aren’t true but appeal to ideologues. So this is all about political pandering, and has nothing to do with merit or common sense.
The strategy is going to backfire. It is going to provoke anger among many dozens of GOP legislators who know firsthand what Ex-Im has done to create jobs in their districts, and resent being criticized for supporting their constituents. And when congressional elections roll around in November, it is going to make many voters in the Republican heartland wonder which is worse — a Democratic Party that wants to raise their taxes, or a Republican Party that wants to destroy their jobs.
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