Tags: Williamson | Ex-Im | bank | loan

National Review's Williamson Says Extinguish Ex-Im Bank — Part I

By    |   Tuesday, 19 Aug 2014 03:04 PM

On Aug. 6, Kevin Williamson, deputy managing editor of National Review, appeared on C-SPAN's Washington Journal to talk about his article "Extinguish Ex-Im, but do it gently" that discusses the pending reauthorization of the charter of the export finance agency, which is scheduled to expire at the end of the fiscal year on Sept. 30, with Congress scheduled to be out of session for most of the time between now and then.

Williamson explained with brutal directness that the purpose of the bank is "to give money to Boeing." He quipped that 90 percent of what the Ex-Im Bank does could be achieved by simply writing checks to Boeing, Caterpillar and GE. The Bank provides subsidized loan guarantees to support exports, as Williamson eloquently put it, to "a very small number of very large companies."

Host Greta Wodele Brawner showed a clip of GE CEO Jeff Immelt on a panel with President Clinton at a U.S.-Africa panel defending Ex-Im as one of the things about government that is not broken, (which is something one would expect one of the three leading beneficiaries of the bank to say). Immelt complained that "the fact that we have to sit here and argue for it is just wrong," given that there are 53 such banks operated by various countries around the world. He argued that Ex-Im is needed because "it shows the U.S. cares," and if the United States and the World Bank join a deal, "then risk capital comes in." Immelt further claimed that Ex-Im "creates lots of job," an issued that is disputed.

Williamson responded that "virtually everything he said is wrong. There's no evidence that Ex-Im creates any jobs whatsoever." He winced at the thought that Immelt has to be reassured that "we care."

Williamson pointed out that to evaluate Ex-Im, it is necessary to count the costs as well as the benefits, and the costs are "serious and indirect." He explained that the transactions are typically structured so that the government is guaranteeing loans of a bank like JPMorgan Chase, "so you transfer risk from Wall Street to the American taxpayer" and provide subsidies for companies at home and abroad. He cited the cancellation by Delta of a route to India after Ex-Im subsidized the purchase of planes by Air India, and he referred to criticism by the Government Accountability Office of Ex-Im's accounting.

According to Williamson, the 2008 episode of the ongoing financial crisis should have taught Americans that "the government isn't very good at managing complex financial institutions."

Asked by Brawner to comment on the argument that failure to subsidize loans to exports would put American jobs in jeopardy, Williamson responded, "Yeah, this is one of the oldest and most economically illiterate arguments you can make to defend these sorts of things," reminiscent of the arguments for the Smoot-Hawley tariff. He called it "crony capitalism" and asked in jest whether, since the Chinese use convict labor in their enterprises, we should do it too. He noted that Ex-Im touches fewer than 2 percent of U.S. exporters, "so 98+ percent of our exporters get by fine."

Williamson recalled that President Obama was a supporter of Ex-Im a few years ago and that Sen. Elizabeth Warren, D-Mass., supports it now, but they also support "the world's highest corporate income tax rate."

(Archived video can be found here and here.)

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Robert-Feinberg
On Aug. 6, Kevin Williamson, deputy managing editor of National Review, appeared on C-SPAN's Washington Journal to talk about his article "Extinguish Ex-Im, but do it gently" that discusses the pending reauthorization of the charter of the export finance agency.
Williamson, Ex-Im, bank, loan
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2014-04-19
Tuesday, 19 Aug 2014 03:04 PM
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