Ten Reasons to Abolish the Export-Import Bank
Reauthorization votes are typically dull affairs. But this year’s fight over the Export-Import Bank’s reauthorization is anything but. This year, the bank celebrates its 80th anniversary, but it might not celebrate its 81st. Unlike most other agencies, the Export-Import Bank, also known as the Ex-Im Bank, will cease to exist unless Congress specifically votes to reauthorize it. Each reauthorization bill contains a date by which the next reauthorization must take place, typically within four or five years. The most recent reauthorization, in 2012, granted the Bank until September 30, 2014 before another reauthorization vote.
But in 2012, for the first time in many years, there was a political fight. The opposition took both parties’ leadership by surprise. They did not succeed in stopping reauthorization, which passed 330-93 in the House and 78-20 in the Senate. Even so, the votes were the closest in many years. Libertarians, as well as conservatives with free-market leanings and progressives of a more populist bent, have long opposed the Export-Import Bank on corporate welfare grounds.
This year’s Ex-Im Bank reauthorization is gearing up to be an even bigger fight. House Speaker John Boehner and House Minority Leader Nancy Pelosi have both been vocal in their support for the Bank. So have Ex-Im Bank’s largest beneficiaries and business interests like the U.S. Chamber of Commerce and National Manufacturers’ Association. Against the Bank stand upstart politicians from both parties, including Rep. Justin Amash (R-Mich.) and Sens. Mike Lee (R-UT), Elizabeth Warren (D-Mass.), and Bernie Sanders (I-Vt.). Sanders, an independent, caucuses with the Democrats.
The renewal fight received an additional dose of drama with House Majority Leader Eric Cantor’s (R-Va.) surprise primary election defeat on June 10. Cantor favors reauthorizing Ex-Im, while his successor as Majority Leader, Rep. Kevin McCarthy (R-Calif.), opposes reauthorization. McCarthy voted in favor of the 2012 reauthorization, but announced his opposition shortly after he won the vote to become Majority Leader.
Ex-Im opponents can win three ways. One is to delay. Without a reauthorization vote, the Ex-Im Bank’s charter automatically expires on September 30. At that point, the Bank would cease to exist. Its portfolio would move to the Treasury Department, and be gradually wound down over a period of several years. (Ex-Im’s longest-term financial product takes 18 years to mature.) The second way is to vote it down. The third way is for Congress to pass, and President Obama to sign, the Export-Import Bank Termination Act, sponsored by Rep. Amash and Sen. Lee.
The stage for this big political fight of 2014 was first set up on February 2, 1934, when President Franklin D. Roosevelt issued Executive Order 6581, creating the Export-Import Bank. Originally called the Export-Import Bank of Washington, its mission was to increase U.S. trade with the Soviet Union. The following month, FDR’s Executive Order 6638 created the Second Export-Import Bank of Washington, tasked to increase trade with Cuba (pre-Castro and pre-embargo). The two Ex-Im Banks merged in 1936 and became an independent agency with the passage of the Export-Import Bank Act of 1945.
For most of its history, the Export-Import Bank has directed most of its benefits to a handful of large, politically connected firms. In other words, its main function is to dispense corporate welfare. With more $37 billion in business in 2013 and a total portfolio near its statutory limit of $140 billion, Ex-Im is one of the federal government’s largest corporate welfare programs. President Obama wants to raise the cap to $160 billion with this year’s reauthorization.
This paper collects 10 reasons why the Export-Import Bank should be abolished by any of those three methods.