Commentary: Failing the test on basic economics
Here’s a quiz: Which politician favors reauthorizing the Export-Import Bank, which aids American companies that compete in world markets and last year helped support $37 billion in exports and 205,000 domestic jobs while actually turning a profit?
Is it Rep. Kevin McCarthy, the new majority leader of the House of Representatives, who voted for the agency in 2012 and belongs to a party long defined by its devotion to business interests? Or President Obama, often characterized by his opponents as a job-destroying crypto-Socialist?
It’s a measure of how crazy things have gotten in Washington that the answer is Obama. He’s joined with such notorious right-wing groups as the Chamber of Commerce and the National Association of Manufacturers in defending the Ex-Im Bank, whose charter expires on Sept. 30.
McCarthy, meanwhile, is so intimidated by the tea party faction in his own ranks that he now opposes an institution he once supported and might not even bring the reauthorization measure to the House floor.
This legislative paralysis mirrors what happened on immigration reform, which passed the Senate with strong bipartisan support but was then buried in the House without a vote.
Both measures make economic sense. Both would reward entrepreneurship and generate jobs. Both have the strong backing of organized business. And both are opposed by hard-line conservatives who prefer rigidity to reality, who are determined to ignore economic facts and view the world through a haze of ideological illusion.
In the case of immigration, opponents insist on branding all undocumented workers as “criminals” who don’t deserve “amnesty,” while refusing to recognize the services they perform, the jobs they create and the taxes they pay.
As for the Ex-Im Bank, it is derided as “crony capitalism” and “corporate welfare.” McCarthy said on Fox News Sunday that it is no longer needed because it provides a service “that government does not have to be involved in. The private sector can do it.”
But that’s just not true. Intoning the magic words “private sector” like a religious mantra does not obliterate economic reality. As the bank’s own policy statement puts it, “Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. We assume credit and country risks that the private sector is unable or unwilling to accept.”
Moreover, the international playing field is not level. Fifty-nine other countries subsidize their exporting industries, often heavily. As a letter from 865 business executives and organizations recently said, canceling the Ex-Im Bank would “amount to unilateral disarmament in the face of other governments’ far more aggressive export credit programs.”
The opposition to the Ex-Im Bank is not just about economics, however. It’s also about culture, emotion, even theology. The tea party is a populist movement that opposes “Bigness” in all its forms. Big Labor and Big Government, Big Cities and Big Media. And now Big Business has joined their roster of evil.
This mindset reflects a rebellious impulse that divides the Republican Party and departs sharply from the GOP’s traditional approach. The Ex-Im Bank has been around for 80 years and has always commanded bipartisan support.
Tea party types like to lionize Ronald Reagan but in fact he was far more flexible and pragmatic than they are. He never deluded himself that undocumented immigrants would “self-deport” and in 1986, signed legislation legalizing about 3 million of them. He was also a strong supporter of the Ex-Im Bank, saying in 1984 that it “contributes in a significant way to our nation’s export sales.”
In 2012, the House approved the bank 330 to 93, with 147 Republicans voting yes; the 72 Senate supporters included 27 Republicans. And today, Republicans who are not intimidated by the tea party or blinded by prejudice continue to understand the bank’s vital work.
Take Texas Gov. Rick Perry who wrote to congressional leaders: “Since the 2008 financial crisis, the Ex-Im bank has helped more than 1,200 Texas companies finance more than $19 billion in exports — more than any other state. More than half of these exporters were small businesses, with more than 20 percent of those being women- and minority-owned enterprises.”
Historically it was knee-jerk liberals who assumed there was something evil about corporations making money. They were always derided — and rightly so — by Republicans who pointed out that if corporations didn’t prosper they couldn’t create good jobs, pay good wages or provide good benefits.
Now it’s conservatives like Kevin McCarthy who are being quizzed on their knowledge of basic economic principles. And failing.