The remaining days of the U.S. Export-Import Bank may be numbered, beset as it is by accusations of corporate cronyism, but at least one big-state governor thinks it’s a good idea to start up a smaller-scale version of the federal bank.
New York Gov. Andrew Cuomo proposes to create what he envisions as the Empire State’s own business-boosting version of the Export-Import Bank, a much-contested agency that key congressional leaders intend to kill.
The New York Democrat says his state-level take on the Ex-Im Bank would offer loans, loan guarantees and grants to help New York businesses expand into foreign markets.
Cuomo’s plan, announced Tuesday, is part of a $35 million “Global NY Development Fund” that would devote $25 million to making loans so that small businesses could “develop capacity to enter new markets.”
Another $10 million would operate as a grant fund for small- and medium-sized businesses seeking to develop “export capacity.”
The proposal by Cuomo, touted by some as a Democratic contender for president in 2016, includes a partnership with the federal Export-Import Bank. Under the initiative, the federal agency would provide short-term loans of up to $500,000 to New York businesses.
Creation of an export-import bank for New York would require approval from the state legislature.
“The fundamental role for government should be to develop the economy, because if the economy is running and jobs are coming in, people have opportunity,” Cuomo said in a statement.
Diane Katz, research fellow in regulatory policy at The Heritage Foundation and a critic of the Export-Import Bank, disagrees. Katz told The Daily Signal:
Unfortunately, Mr. Cuomo is dead wrong about government’s role. It is not government’s role to ‘develop’ the economy. If anything, government interference is far more disruptive to the economy than beneficial, and the record of states’ business development programs is just plain lousy.
The Export-Import Bank provides loans and loan guarantees to foreign countries and companies for the purchase of U.S. products. The continued existence of the 80-year-old agency is more threatened than ever.
Conservatives led by House Financial Services Chairman Jeb Hensarling, R-Texas, as well as liberals ranging from Rep. Alan Grayson, D-Fla., to veteran consumer advocate Ralph Nader, argue that the Ex-Im Bank is an engine of corporate welfare and cronyism. They want to see the bank shuttered.
Ex-Im supporters say the agency helps small businesses remain competitive in the global market and creates jobs in the United States. LIberal Democrats such as President Obama and Sen. Elizabeth Warren of Massachusetts are among its supporters.
The majority of Ex-Im’s financing, though, benefits a small group of large companies that includes Boeing, General Electric and Caterpillar.
The Government Accountability Office has found that Ex-Im can’t distinguish between jobs that would exist with or without the federal bank’s subsidies.
The agency’s charter was set to expire Sept. 30, but lawmakers agreed to extend it until June 30 as part of a government funding bill.