It’s not every day that the American people score a victory over the global elite, but that’s exactly what happened last week.
The victory came in the form of preventing the ascension of Mark McWatters to the Board of Directors of the Export-Import Bank of the United States, whose nomination Sen. Richard Shelby, R-Ala., has successfully bottled up in the Senate Banking Committee.
Created by executive order during the height of the Great Depression, the Ex-Im Bank has been used as a tool to reward politically connected elites, both in the United States and abroad, for decades.
Here’s how it works: a large corporation pays money to lobbyists and politicians so that Ex-Im will leverage the full faith and credit of American taxpayers to guarantee loans used to finance global transactions.
Because these loans are backed by you, the United States taxpayer, these politically favored global corporations are able to secure below-market interest rates. The difference between the market interest rate the global corporations would have paid to finance their transactions and the below-market interest rate made available by Ex-Im’s guarantees acts as a giant taxpayer subsidy for these global corporations.
The lobbyists and politicians supporting these global corporations will tell you that Ex-Im’s loan guarantees are cost-free programs that support American middle-class jobs.
First of all, as any economist will tell you, there is no such thing as a free lunch. As the Congressional Research Service has explained, “Subsidized export financing merely shifts production among sectors within the economy, rather than adding to the overall level of economic activity, and subsidizes foreign consumption at the expense of domestic consumption.”
Secondly, if these global corporations are so concerned about American middle-class jobs, then why do they spend millions of dollars lobbying foreign governments to create and maintain their own version of our Export-Import Bank? These corporations aren’t concerned as much about American jobs as they are about maximizing the number of foreign governments that subsidize their business.
And who exactly is on the other end of all these Ex-Im financed deals? China mostly.
China is by far the biggest beneficiary of Ex-Im guaranteed loans. And since most of that financing benefits state-owned firms, the Ex-Im Bank is one of the largest subsidizers of Chinese communist officials in the world.
For instance, in 2013, the Export-Import Bank financed a $63 million deal to help build a semiconductor manufacturing plant in China. How exactly does subsidizing Chinese semiconductor manufactures help save American jobs?
But it does help line the pockets of the governing elite both here and in China. That is what the Export-Import Bank is all about.
By blocking the nomination of McWatters to the Export-Import Bank’s board of directors, Shelby has denied Ex-Im the quorum it needs to authorize loan guarantees over $10 million. Between 2007 and 2014, 84 percent of the bank’s subsidy and loan-guarantee deals exceeded $10 million, and the vast majority were given to the wealthiest, most well-connected businesses that should have no problem acquiring financing on the open market.
The American people have not succeeded in shutting down this spigot of cash to the world’s global elite yet, but we are gaining votes in the House and Senate every year.
We will win eventually.