President Obama’s support for the Ex-Im Bank is not only a massive reversal of his previous position, it’s not sound policy. Instead of demanding Congress reauthorize the Bank, he should let the legislative branch do its job. Congress must decide whether the Bank can be reformed so it will no longer kill American jobs or whether the charter should be allowed to expire once and for all.
Ex-Im Typifies the Cronyism Obama Vowed to Fix
The American people should be sadly unsurprised to hear President Obama say one thing and see him do another. From the now-laughable “if you like your plan, you can keep it” claim to those infamous “red lines” in Syria, empty rhetoric is unfortunately all too common in this administration. But with his recent ringing endorsement of the Export-Import Bank of the United States, the President has taken his flip-flopping to a new level.
In his weekly address to the nation on August 23, President Obama praised the Ex-Im Bank, a federal credit agency that provides financing for deals between American companies and foreign clients. He focused on one of his favorite targets – Members of Congress. The Ex-Im Bank’s fate lies largely in their hands, as congressional action is required to renew the Bank’s charter on or before its expiration on September 30. The President implored his listeners to contact their representatives and urge them to support the Bank because, as he bluntly put it, “the bank works.”
A President voicing his support for one of the myriad agencies in his massive government is not, in itself, surprising. But for Obama, his support for the Ex-Im Bank is an especially stunning reversal. In 2008, during his first campaign for President, then-Senator Barack Obama held decidedly different views. At a campaign speech in Wisconsin, less than two months before his election, candidate Obama called the Export-Import Bank “little more than a fund for corporate welfare.” That’s a far cry from “the bank works.”
In this case, it would appear that wisdom did not come with age. The Barack Obama of 2008 seems to have a better grasp of the situation than does his 2014 incarnation. “Corporate welfare” is a phrase often applied to Bank by its critics, and with good reason. Ten big corporations – industrial giants like Boeing, GE and Caterpillar – receive approximately 60 percent of Ex-Im’s taxpayer-backed financing. These are all companies that would certainly survive without government handouts. Boeing, in particular, posted revenues of nearly $90 billion in 2013, while at the same time netting $8 billion from the Ex-Im Bank.
This isn’t just “corporate welfare” – it’s worse. A welfare program is supposed to function as a safety net, to provide temporary relief and help a struggling individual get back on their feet. Companies like Boeing were hardly struggling to begin with and the loss of Ex-Im funding won’t exactly cause them to suddenly fold. The Ex-Im Bank only supports about two percent of total American exports.
But the question remains – why would President Obama change his tune on the Bank between 2008 and today? Elsewhere in the same Wisconsin speech, he rails against corporate CEOs and the “excesses of Wall Street.” Could it be that now, as President of the United States, his courage to stand up to the corporate types – the main recipients of Ex-Im’s corporate welfare – has somehow failed him? Where is the Barack Obama who promised to bring change to Washington?
The Ex-Im Bank typifies the big business, big government, hand-in-hand cronyism that he vowed to fix. It undermines our free market system and does anything but level the playing field. We're left with a distorted marketplace and small businesses unable to truly compete equally with the corporate behemoths who dominate Ex-Im's loan disbursements.
To make matters worse, by supporting the Ex-Im Bank, the President is throwing himself behind a policy that’s hardly worth defending. Ex-Im’s deals with foreign firms can have unfortunate consequences for American workers. When the Bank gives a foreign airline a sweetheart deal on a Boeing jet, they give that airline a competitive advantage against airlines based in the United States. One study indicates that this practice has already cost the U.S. airline industry over 7,000 jobs.