Tags: Williamson | Ex-Im | bank | subsidy

National Review Says Extinguish Ex-Im Bank — Part II

By    |   Tuesday, 19 August 2014 03:08 PM

Kevin Williamson, deputy managing editor of the National Review, sat for a two-part interview with C-SPAN host Greta Wodele Brawner Aug. 6 about the fate of the Export-Import Bank, the U.S. export finance agency whose charter is set to expire at the end of the current fiscal year unless Congress extends its charter. This seems likely to happen, but House Republicans are balking on the ground that the program is costly and benefits only a handful of companies, mainly Boeing, Caterpillar and General Electric.

Williamson suggested that there are ways to subsidize exports by changing the tax code for the benefit of a large swath of companies rather than subsidizing only a few. Brawner read an editorial from the Los Angeles Times that called the GOP "off target" on this issue and contended, "The vast majority of the deals financed by Ex-Im involve small U.S. exporters who say they can't interest U.S. banks in financing their sales on affordable terms, either because the dollar amounts are low or because the buyer is in a developing country." Often, the Times said, these countries don't have enough reserves to cover foreign deals or the risk that they might not be paid.

In response, Williamson took on three claims the bank makes about itself: that it doesn't compete with traditional banks, that it charges an appropriate price for its services and that it only finances good credit risks.

He finds these arguments contradictory. For example, if Ex-Im were charging an appropriate price for appropriate risks, the bank would be competing with the private sector, or else they aren't good credits. (That's assuming the "too big to fail" banks that might finance many of these deals should still be considered to be in the private sector themselves, because they, too, are subsidized.)

He argued, though, that "what's really happening is that mostly Ex-Im is serving companies that could get financing, they're simply doing it as a discount, so it's more attractive to everybody."

Williamson charged that "one really dishonest thing" is that the bank claims that 90 percent of its transactions are for small exporters, but if you count by dollars, 80 percent to 90 percent of the money in a given year goes to a handful of companies.

In talking with callers, a Democrat argued that the bank is a good deal because it makes money for the government, but Williamson questioned the accounting for this.

A Republican who exports lumber praised the bank for conducting a working capital program that enables him to export to Europe on terms that conventional banks would not finance. Williamson responded that this is a subsidy to some combination of the exporter, the conventional bank and the customer.

In response to a caller who had changed his position from support of the bank to opposition, Williamson repeated his charge that politicians like President Obama and Sen. Elizabeth Warren, D-Mass., have "done a 180" on the issue as they ran for higher office and sought a broader audience for fundraising from companies that want a lot from Washington. Williamson called for an orderly winding down of the bank's $140 billion portfolio as part of a general attack on corporate welfare.

(Archived video can be found here and here.)

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Kevin Williamson, deputy managing editor of the National Review, sat for a two-part interview with C-SPAN host Greta Wodele Brawner Aug. 6 about the fate of the Export-Import Bank.
Williamson, Ex-Im, bank, subsidy
Tuesday, 19 August 2014 03:08 PM
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