While the Tea Party has experienced devastating losses this election cycle, its stand against corporate welfare may be starting to win over some in the Republican Party. A big test, however, is coming up in the debate over whether to reauthorize the Export-Import bank before it expires September 30. The Ex-Im Bank has long been a Tea Party target.
What is the Ex-Im bank? The Bank is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945. The mission of the Ex-Im Bank is “to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers.”
While this sounds great in general for American business, it mainly benefits the largest and most politically well-connected businesses in the world. Caterpillar, Boeing, Citigroup and JPMorgan are some of the top beneficiaries. Best of all for big business, it is “free money” to them because taxpayers cover the risk for any shortcomings. When he first ran for president in 2008, Barack Obama recognized this and called the Ex-Im Bank as “little more than a fund for corporate welfare.” What happened to this Obama?
Like other agencies in recent years such as the IRS and the Secret Service, the Export-Import bank also has been riddled with scandal. On Tuesday, The Wall Street Journal reported that the bank has suspended or removed four officials over alleged kickbacks. Officials at the bank allegedly accepted gifts and cash, and improperly attempted to award contracts or steer loans.
The Bank also has a connection to disgraced former Rep. William Jefferson (D-LA), who is serving a 13 year prison term for bribery. According to a 2007 indictment, Jefferson “introduced [an iGate executive] and Nigerian Company A executives to personnel of the Ex-Im Bank for the purpose of obtaining financial support for iGate and Nigerian Company A’s venture in Nigeria.” While this deal fell apart, he was able to successfully find another Nigerian partner for iGate.
Despite all of this, there is still significant pressure to reauthorize the bank from big business and many Republicans appear to be folding. Despite the surge in awareness amongst Republicans on the impact of corporate welfare, breaking the addiction to it will prove difficult to many. There must be consistent lobbying from free-market supporters such as Heritage and CATO so the corporate socialists do not get their way as usual.
Ending the Ex-Im Bank would not just be a victory for the Tea Party, it would be a victory for common sense. Let’s see if Congress can actually do something useful for once.