In recent weeks, the U.S. Chamber of Commerce has put its arm-twisting and favor-seeking skills to work to try to save the Export-Import Bank.
Along with the Chamber, organizations like the National Association of Manufacturers, Aerospace Industries Association and Nuclear Energy Institute are committing large amount of money to some “all-hands-on-deck efforts,” which include lobbying and campaign ads to save the bank.
However, this week, the groups have taken on a new angle: If they can't convince conservatives in Congress that the bank's charter must be reauthorized maybe one of their heroes can. The result; a widely distributed ad featuring a 1984 letter signed by President Ronald Reagan praising the bank on its 50th anniversary.
Obviously, no one should be fooled by such a blatant appeal to authority. But here are a few more reasons to ignore the whole thing.
Reagan may be a hero of the conservative movement but no one claims he was always right. If he supported the Ex-Im Bank, he was wrong and no one has to follow his footsteps.
But was he really such a big fan of Ex-Im? His administration, under the influence of budget director David Stockman, managed to cut the bank’s lending budget by 40 percent. When Jimmy Carter left office, he had proposed a $7 billion lending budget for the bank, and by 1986 the budget had fallen to $3.2 billion. Stockman was a staunch advocate of getting rid of the bank altogether, and I assume had some support from the president for the policies he pursued.
Also, when Reagan wasn’t praising the bank, he was actually making the case that its budget should be cut. Here are a few samples:
During his address before a Joint Session of the Congress on the Program for Economic Recovery on Feb. 18, 1981, Reagan said, "We're asking that another major industry--business subsidy I should say, the Export-Import Bank loan authority, be reduced by one-third in 1982. We're doing this because the primary beneficiaries of taxpayer funds in this case are the exporting companies themselves--most of them profitable corporations."
In his address to the nation on the Federal Budget and Deficit Reduction on April 24, 1985, he noted, "Unfortunately, hardly anyone could honestly call Federal budgets wise, careful, or fair. […] Is it fair to ask taxpayers to help pay billions for export subsidies to a handful of America's biggest corporations?" And he added, “We'll also save billions by eliminating taxpayer subsidies to some of America's biggest corporations through Export-Import Bank loans and by abolishing the Small Business Administration's lending programs, which are not only costly and unfair but unneeded in an economy creating over 600,000 new businesses and corporations a year.”
And he said this about interest groups complaining about his Ex-Im cuts during his radio address on the Fiscal Year 1986 Budget (March 2, 1985), "I won't deny all the groups I mentioned represent valid interests, which may seem compelling. But there is a larger interest to represent, more compelling and urgent than all the rest -- the freedom and security of American taxpayers who must not only work, save, and invest to pull our economy forward but also pay all the bills for everything this government does."
Why would he write and sign this letter in 1984? I don't know but I assume it has to do with politics, regulatory capture and campaign contributions. Unfortunately, no one in Washington is immune to these dark forces. Besides, he isn't the first president to flip-flop on policy issues. Remember, when then-Senator Obama called the bank “little more than a fund for corporate welfare”? That was before he caved to interest groups once he was president and became a fervent advocate for the Bank.
Fourth, the bank under Reagan was a shadow of what it is today, even after Stockman and the Reagan administration lost ground to special interests — by 1989, Ex-Im was responsible for $12.1 billion in activity. But even then, the bank’s guarantees and insurance at any one time couldn’t exceed $40 billion, and total outstanding liabilities couldn’t exceed $58.7 billion. Today, the bank’s outstanding liability is twice that amount.
Unfortunately, as I recently wrote “some things haven't changed about the bank: Back then, most of its activity went to serve Boeing, and it's mostly serving Boeing today. Back then, the bank bestowed most of its subsidies on a handful of giant manufacturers like GE and Westinghouse Electric, that's still the case. Reagan's Ex-Im backed a ridiculously small share of U.S. exports, and so does President Obama's.”
So no matter how President Reagan felt about the Ex-Im Bank, 80 years of it is enough. Let's X-out Ex-Im.