The Heritage Foundation is disproving a widely held misconception about conservatives that they are locked into rigid ideological positions on policy issues. In fact, when it comes to Heritage’s assault on the Export-Import Bank, the story changes on a weekly basis. As defenders of Ex-Im demolish misleading arguments against its programs, Heritage fabricates increasingly fanciful complaints. In the process, it sounds more and more like the left-wing ideologues of a generation ago that Ronald Reagan so soundly defeated. Here are a few examples from the Ex-Im talking points Heritage is currently circulating on Capitol Hill.
The first talking point is that “multinational corporations don’t need taxpayer subsidies,” with plane maker Boeing held up as the worst offender. “Multinational corporations” was a favorite bugaboo of the Left in pre-Reagan years — the implication being such companies were loyal to no country — however that hardly applies to Boeing. It assembles all its planes in the U.S. and then exports 80% of them, but it spends 80% of its money in the U.S., so it is very much an American enterprise. And Boeing’s customers aren’t getting subsidies from Ex-Im, because once you add in the cost of interest and fees, its loans cost more than going to a commercial lender. Ex-Im exists mainly to help overseas buyers of U.S. goods who can’t tap private-sector credit.
The second talking point is that “Ex-Im only ‘profits’ on paper,” which is Heritage’s oblique way of acknowledging that Ex-Im last year turned over to the Treasury a billion dollars in fees charged to users of its programs that it didn’t need to sustain operations. That particular talking point goes on to complain that Ex-Im accounting is unreliable because it fails to factor in the risk of defaults by foreign users of its programs. Could that be because at 1%, Ex-Im’s default rate is lower than the default rate at leading commercial banks? Maybe we should tell Wall Street those big banks are only profitable on paper too because they haven’t fully covered the cost of potential healthcare obligations and earthquakes. If Air Ethiopia defaults on an Ex-Im loan, its jetliners just get repossessed and sold to somebody else.
The third talking point is that Ex-Im has “no proof on employment gains” generated by its programs. This statement would appear to confirm the impression that Heritage is largely populated by academics who have no business experience. There are literally thousands of small businesses in the U.S. that will attest to the job creating benefits of Ex-Im programs, but apparently Heritage hasn’t talked to any of them. How naive do you have to be to doubt that when General Electric tapped Ex-Im loans to beat a Chinese competitor in selling locomotives to Pakistan, it had a positive impact on hiring at the plant in Pennsylvania?
The fourth talking point is that “Ex-Im subsidies threaten U.S. jobs.” This assertion actually manages to squeeze three errors into a six-word sentence: (a) Since Ex-Im programs don’t rely on taxpayer funds and cost users more than commercial lenders charge, they are by definition not subsidies. (b) Since domestic companies that do not have access to Ex-Im programs can get better terms from private-sector lenders, they suffer no harm. (c) Since foreign customers have plenty of other places to buy jetliners, locomotives and earthmovers — and 60 export credit agencies in those places from which to choose — cutting off access to Ex-Im programs would not change the competitive landscape.
The fifth and final item in the Heritage Foundation’s fanciful list of particulars is that “U.S. subsidies are not needed to balance foreign subsidies.” This will come as a big surprise to Boeing, which has seen all of its domestic competitors in jetliners driven out of business and its own share of the global market cut nearly in half by European export subsidies the World Trade Organization has determined to be illegal. It probably will also bring smiles in Beijing, where the China Development Bank has been given over a trillion dollars in state funds to, among other things, promote exports. Now, those really are subsidies, unlike what Ex-Im does. But Heritage doesn’t seem to know the difference.
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