Ex-Im Bank Compromise
Generally, when one thinks of “compromise,” one assumes that both sides in the discussions give up something they want in return for striking a deal. As we have seen, in Washington, however, “compromise” means expanding government, albeit perhaps a bit slower than the other guys.
The most recent example of this so-called compromise is a Friday night deal to extend and expand the Export-Import (Ex-Im) Bank. After a lengthy negotiation, House Majority Leader Eric Cantor (R-VA) and House Minority Whip Steny Hoyer (D-MD) unveiled a “compromise” that maintains the fundamental structure of the bank, and gives President Obama pretty much what he wanted all along: an expansion of the Ex-Im Bank, which is “little more than a fund for corporate welfare.”
The deal will extend the Bank’s charter through September 2014 and expands the Bank by raising its loan exposure cap by 40% to $140 billion. The Bank is expected to reach its lending cap within the month. Currently, the exposure cap sits at $100 billion, but would increase to $120 billion for this year, $130 billion in 2013, and $140 billion in 2014. We’ve seen this movie before, though; come September 2014, we will be fighting this same battle again. The Bank won’t be eliminated – as it should be – it will simply be expanded once again after a heated argument.
CQ reports that the Treasury Secretary (remember, that’s Tim Geithner, the man with no plan) will be responsible for negotiating a multilateral agreement to reduce and eventually eliminate government export subsidies. It’s a tall order, and absent any incentive (such as the expiration of the Bank), Secretary Geithner and others have very little incentive to negotiate agreements.
As the Wall Street Journal notes, some Republicans “are trying to maintain that image by claiming that they are “reforming” Ex-Im.” A couple of provisions included in the deal are supposed to increase accountability and transparency, but will do nothing to fundamentally change the way the Bank operates. For example, Ex-Im will now have to report its default rates every quarter and if that rate exceeds 2%, the Bank will have to submit a plan to correct that – which is supposed to ensure that no more money goes to failing, politically connected companies like Solyndra. Should the bank continue its crony capitalism ways after that, an outside auditor would be brought in.
The Bank would also have to inform the public about any loan worth more than $100 million. That’s good, not like there’s any way around that…oh wait, there is. The Bank will just give less than that to the company it wants, I mean, one penny less and they don’t have to report.
Needless to say, the Wall Street Journal finds these arguments unpersuasive, saying they are an “eyewash compared to the increase in Ex-Im exposure.”
Lawmakers – on both sides of the aisle – are just not adept at ending government programs. Think about it. Can you name the last government program that was actually ended? The deal represents a huge missed opportunity for conservatives to actually reduce the size, scope and distorting effects of government.