Making the Case against the ExIm Bank (Again)

Apr 24, 2012

It seems it only takes one anecdote - real or imagined - to convince many lawmakers to intervene in the market, and use the full force of the federal government to pick winners and losers. Yet, it takes many different arguments and facts to explain why a lawmaker should not intervene in the free market. In that spirit, here is yet another argument against extending and expanding the Export-Import Bank: film subsidies.

What do film subsidies and the ExIm Bank have in common? Paul Wallbank, writing for Australia's Business Spectator, explains:

While ExIm and screen subsidies aren't directly linked in the US - the bank being a federally funded body that finances American manufacturing sales to foreign market while state governments compete for productions - both illustrate the zero sum game of corporate welfare that leaves citizens poorer in the process.
When Delta Airlines goes to buy or lease a Boeing 777, they have to find funds at a commercial rate of interest. Air India on the other hand gets a subsidised rate courtesy of ExIm bank.
However if Delta chooses to buy an Airbus A330, European governments will offer similar subsidies to the American carrier.

Mr. Wallbank goes on to talk about the folly of his country competing with foreign countries in an ever-higher stakes game of film subsidization. Back on this side of the Pacific, that point should sound familiar for American lawmakers. In 2009, 52 Senators voted to strip $246 million out of the now-discredited stimulus that would have subsidized the movie industry. Proponents claimed it would create (or save!) American jobs by countering foreign subsidies and thus making the movie industry more competitive.

Sounds familiar, doesn't it? Supporters of the ExIm Bank use the exact same rational. They say other countries are subsidizing exports, so America should do the same thing; and if we do not, jobs will be at risk.

Interestingly, of the 52 Senators that voted to strip the Hollywood handout from the stimulus, 33 Republicans and 9 Democrats remain in the Senate, which is enough to filibuster an extension or expansion of the ExIm Bank.

The real question is whether these Senators (see below )will choose to be intellectually consistent, or whether they will decide - for whatever parochial reason - to be against these types of handouts before they are for them. Their constituents deserve to know if they have had the same sort of political evolution on ExIm Bank-style handouts as President Obama, who once called the bank "little more than a fund for corporate welfare" before making it a key plank of export agenda.

Sen. Lamar Alexander (R-TN)
Sen. John Barrasso (R-WY)
Sen. Michael Bennet (D-CO)
Sen. Richard Burr (R-NC)
Sen. Thomas Carper (D-DE)
Sen. Robert Casey (D-PA)
Sen. Saxby Chambliss (R-GA)
Sen. Thomas Coburn (R-OK)
Sen. Thad Cochran (R-MS)
Sen. Susan Collins (R-ME)
Sen. Bob Corker (R-TN)
Sen. John Cornyn (R-TX)
Sen. Michael Crapo (R-ID)
Sen. Jim DeMint (R-SC)
Sen. Michael Enzi (R-WY)
Sen. Lindsey Graham (R-SC)
Sen. Charles Grassley (R-IA)
Sen. Kay Hagan (D-NC)
Sen. Orrin Hatch (R-UT)
Sen. Kay Hutchison (R-TX)
Sen. James Inhofe (R-OK)
Sen. John Isakson (R-GA)
Sen. Mike Johanns (R-NE)
Sen. Tim Johnson (D-SD)
Sen. Jon Kyl (R-AZ)
Sen. Joseph Lieberman (I-CT)
Sen. Richard Lugar (R-IN)
Sen. John McCain (R-AZ)
Sen. Claire McCaskill (D-MO)
Sen. Mitch McConnell (R-KY)
Sen. Lisa Murkowski (R-AK)
Sen. Mark Pryor (D-AR)
Sen. James Risch (R-ID)
Sen. Pat Roberts (R-KS)
Sen. Jefferson Sessions (R-AL)
Sen. Richard Shelby (R-AL)
Sen. Olympia Snowe (R-ME)
Sen. John Thune (R-SD)
Sen. Mark Udall (D-CO)
Sen. Jim Webb (D-VA)
Sen. Roger Wicker (R-MS)