Ex-Im Bank Fight Shows How We Can Sunset More Useless Agencies


As far as flash-point issues go, the Export-Import Bank is about as unlikely as it gets. Few people have even heard of Ex-Im, a federal agency that offers loans and loan guarantees to U.S. exporters and their foreign customers.
In its 80-year history, only rarely has its periodic reauthorization become contentious. But lo and behold, this year's Ex-Im reauthorization turned out to be one of this year's fiercest political battles.

The question is: Why?

The answer lies in how Ex-Im is set up. Unlike most other federal agencies, its charter automatically expires unless Congress votes to reauthorize it by a certain date.
If reauthorization is voted down — or a vote is never held — Ex-Im disappears. That unusual setup made Ex-Im low-hanging fruit for reformers concerned about corporate welfare.

This was a fight that was actually winnable, not so much because of Ex-Im's specific mission, but rather the rules of the political game surrounding it.
What Ex-Im does matters, too. It is practically a textbook example of cronyism run amok. Nearly half of its activity benefits just one company, Boeing.
Its top 10 beneficiaries, all large businesses that don't need the help, capture more than three quarters of Ex-Im's business. Ex-Im also harms other domestic businesses by directly subsidizing their direct foreign competitors.
This led to a recent lawsuit from Delta Airlines when Air India, an airline owned by the Indian government and subsidized by Ex-Im, pushed Delta out of the growing Indian market.

Of course, reformers were helped by Ex-Im having had at least 74 separate corruption allegations in the last five years — an impressive feat for an agency with only 400 employees.

If Ex-Im didn't have a redundant or harmful mission, or if it did a better job pursuing it, it wouldn't be in reformers' cross hairs in the first place.
But without its automatically expiring charter, reformers wouldn't stand a chance of success. Most other agencies do not have an expiring charter, so they carry on in perpetuity with little or no congressional accountability.

Reformers know they can't win those fights, so they rarely try.

That's why the biggest lesson from the Ex-Im fight is that automatic agency sunsets are a good thing, and more agencies should have them.

Yes, Ex-Im survived this reauthorization fight, but it lost some of its swagger. Whether it's this round of reauthorization or the next, Ex-Im will see significant reforms to reduce its pervasive corruption and cronyism, from increased disclosure requirements for employees to term limits for executives.

Most importantly, Ex-Im's survival is not at all guaranteed. Those reforms are nice, but Ex-Im's corruption and cronyism will not fully go away until the agency does.
This gives Ex-Im a strong incentive to self-police its behavior. Its executives know that congressional eyes are watching their every move, and can shut them down if they don't like what they see, or another scandal comes to light.

Few other agencies have this kind of incentive structure. This lack of accountability lowers the quality of services and regulation across the federal government.
Agency executives might not appreciate being put through the wringer at committee hearings every few years, but if an agency has to periodically justify its existence, its officers will at least try to give a worthwhile justification and make sure employees avoid scandals and corruption.

Institutions matter. The rules of the game have a lot to do with how people play it — imagine what basketball strategy would look like if the three-point shot was changed to five points, or how baseball strategy would change if hitters could strike out on a foul ball.

The rules an agency issues aren't the only ones that matter. Rules governing the agencies themselves are just as important. If more agencies had a built-in check such as an automatic sunset that forced a periodic congressional reauthorization vote, they would have an incentive to behave better and pursue their missions in a less burdensome way.
The fight over Ex-Im isn't over. Even with Ex-Im's temporary new lease on life, reformers will still have won an important victory in tamping down its excesses.
For that, they can thank the rules of the game, Ex-Im's expiring charter in particular.

If more agencies, such as the EPA, FCC, and the Department of Education were to have a similar setup, the nature of regulation and agency accountability would markedly improve.