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Hugh Hewitt Book Club

The Export Import Bank Debate

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The debate over whether or not the GOP-controlled Congress should reform and reauthorize the 80 year old Export-Import will absorb a lot of D.C.’s attention in the next two months.  I am a strong proponent of re-authroization for reasons described in detail here.

On Monday’s show I hosted former ExIm Board Member (and my law firm colleague) Dan Renberg and columnist and AEI scholar (and my former editor at Regnery and colleague at The Washington Examiner) Tim Carney to knock the issue around for an hour.  It doesn’t get much more fair and balanced than that:

Audio:

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Transcript:

HH: We now turn to the grit and the down and dirty of American Beltway politics, the Export-Import Bank. And you just said to yourself what? And I here to tell you that this is the most divisive issue among the Republican caucus in the Washington, D.C. area. I learned that all last week. So I brought two experts back. Dan Renberg was on with me last week. You know Dan. He was a member of the Export-Import Bank board of directors from 1999-2003. Do I have that right, Dan?

DR: You do. Thank you, Hugh.

HH: He is one of my colleagues, a partner of mine at Arent Fox. And in studio with, and he supports the bank, and in studio with me opposing the bank, Tim Carney, who I must admit was my editor on the Mitt Romney book I did in 2007. He is my colleague at the Washington Examiner where he is the senior editorial columnist. And he is a visiting fellow with our friend, Arthur Brooks, who is a member of the editorial board. So I have more conflicts of interest in this studio than I’ve ever had at one time. And I’ve got to be abundantly fair, even though I support the Ex-Im. Tim Carney, good to have you on.

TC: Thanks for having me, Hugh.

HH: Okay, because you’re outnumbered by two Ex-Im Bank supporters, I’m going to let you go first. And but that requires that you set up for the benefit of the Steelers fans what the Export-Import Bank is…

TC: Yeah.

HH: And then tell us why you hate it.

TC: The Export-Import Bank is a federal agency created in the New Deal, and what it does is it subsidizes U.S. exports mostly through loan guarantees, but also through loans to foreign buyers of U.S. goods, the idea being that that helps the American manufacturers. So Air China gets a loan from Citibank to buy Boeing jets. Export-Import Bank guarantees that loan so that you know, Citibank doesn’t have to worry about getting paid back. It also does direct loans, sometimes, to foreign buyers. A lot of its satellite sales happen where a U.S. satellite maker gets to export a satellite to Bulgaria or something like that, and Ex-Im loans taxpayer money directly to the foreign buyer. So that, I think, is a pretty fair description of what the agency does. My opposition to it is that government intervention in the economy doesn’t create wealth. It redistributes it. It moves it around, and it moves it around in a politically-oriented fashion instead of where the market would move it, that Ex-Im, it’s not a drain on the federal Treasury, but it is a drain on the economy, because for every winner it creates, it creates a loser. If I’m a U.S. airline, I don’t like the fact that my foreign competitors like Air India are getting a subsidy because they’re buying Boeing. If I’m a U.S. semiconductor manufacturer, I don’t like the fact that Chinese semiconductor factories are getting a U.S. subsidy because their equipment is made in the U.S. or similarly, if I’m a farmer, an American famer, I don’t like the fact that John Deere is jacking up its prices because Ex-Im is driving up the demand on John Deere factories by subsidizing the export of tractors. So there’s losers, and that if you believe in free enterprise, which I do, then you have to assume that when the government is deciding where the money goes instead of the market deciding where the market goes, it’s going to be less efficient. It hurts the economy. But there’s also, and we can get into this later, there’s also the moral issue, that I think if Republicans stand for limited government except when big government benefits big business, then it strips out the moral underpinning of Republicans’ free enterprise arguments, and it gives truth to the liberal attack that when Republicans talk about free enterprise, they’re just shilling for business.

HH: Now Dan Renberg, I want to turn and give you the floor, but I’ll also add on the Ex-Im website, they say they aided 8,800 businesses over the course of the last seven years, so they cover a lot of different kinds of businesses. I just wanted to put that number out there. What do you make of what Export-Import Bank does and how Tim described it, and what the audience should know in round one?

DR: I didn’t know if this is 12 or 15 rounds.

HH: 15, I think, and by the way, the preshow is not as long or as boring as the show on Saturday night.

DR: What’s the pay-per-view take? And what are we getting, Tim? That’s really the question here in terms of free enterprise. I think Tim is, first of all, he’s made, he’s very articulate about his concerns about the bank. There were a couple of things that I picked up on that don’t offend me as much, perhaps, because I think that there are some institutional safeguards. But let’s go back to what Ex-Im Bank does. And Tim mentioned two of the three types of financing that are available. Ex-Im Bank does do guaranteed loans from U.S. commercial banks to foreign buyers. It also on occasion, and we hardly at all did this when I was on the board back from ’99-’03, direct loans to the ultimate foreign buyer. Ex-Im Bank’s statute essentially tries to tilt away from competing with the private marketplace in terms of the lenders, and so direct loans are directly competing of course. Ex-Im Bank is typically only asked to do direct loans when there’s a critical need for it and banks don’t want to be part of the transaction. There was also, if I’m not mistaken, some cases where Brazil’s tariff structure made it much better for Ex-Im Bank to do a direct loan instead of a guaranteed loan. But the other kind of critical type of financing that I think the listeners need to be aware of is the export credit insurance. And that’s where a business, small business, medium-sized business, is buying an insurance policy on its own that if there’s default, Ex-Im Bank will come in and A) it’s a condition as opposed to a full faith and credit guarantee which you’d see in a guaranteed loan. That kind of insurance like we have on our health, on our houses, on our cars, is a really effective tool. It’s a low cost. It’s an insurance policy. It gives that small businessperson wherever in the United States a chance to actually get working capital. You can take your insurance policy from Ex-Im Bank and go to our relationship bank, and they’ll give you a discounted value of that insurance policy, and it gives you a chance to get working capital while you’re offering 60 day, 90 day, 120 day open account credit to our foreign buyers. What I have heard from small businesses, especially when I was on the board and much more involved in this, was that that working capital is a life blood. It’s very important. Domestic banks don’t like to lend against foreign account receivables, whereas the Ex-Im Bank insurance policy permits that.

HH: All right, so that’s the set up. Now Tim Carney, I wrote a column today about the small businesses that benefit from Export-Import, and I looked up one business in Michigan which makes ice machines in which you display fish. Without Export-Import, they couldn’t sell to where they sell, which is 100 countries around the world. And not only is that benefiting the small company in Michigan, it’s benefiting the fish sellers in Kenya and the fish sellers in Bangladesh. Why would you be against that?

TC: Well, Export-Import Bank officials always emphasize their small business loans saying things like 90% of their finance deals go to small businesses. But those are small loans. So if you measure by dollar amount, it’s about 20%. And that’s about half as much as just Boeing gets. So I’ll talk small business, but just keep in mind we’re talking a tiny portion of what Ex-Im does. And on the small business, this is where Export-Import Bank often is competing with the private sector, that these insurance policies, I talked to a couple of people who are in the export finance business. They were at the Export-Import Bank annual conference a couple of weeks ago, because they were looking for exporters. And basically, what they do, sometimes they look for who just got rejected for Ex-Im, and all provide export credit. So in other words, this is exactly what Kevin McCarthy, the House Majority Leader, says, why he opposes the Export-Import Bank, is because often this is doing stuff that the private sector can do or would do if the Export-Import Bank wasn’t there. Would some of these small business exporters lose some business if Ex-Im wasn’t there providing subsidized financing? Yes. But this, that’s just a question of, as I said earlier, redistributing from one sector of the economy to the other. I don’t see why we should favor the ice chipper. I’ve got nothing against him. But why should our government be favoring him when we know that government moving money around the economy is hurting somebody else.

HH: Dan Renberg?

DR: I think that, Hugh, again, Tim makes some excellent points from his perspective. There was a concept of additionality when I was on the board. The notion was that Ex-Im Bank shouldn’t get involved in any deal, no matter how small, unless it was serving to further a transaction that wouldn’t go otherwise. We used to work on calibrating the insurance premium, the cost to the exporter. We used to try to calibrate it a bit above what the private export credit insurers would charge for precisely the reason that Tim is making, which is that the government shouldn’t be in there competing against the private sector. Now it’s not, it’s an art, not a science. You do the best you can. But the point I made last week when I was on your show was no one in his right mind would do business with the federal government if they didn’t have to, because the paperwork, the environmental requirements, the domestic content requirements…so and I’d love to talk more about this perhaps in another segment. No one would try to get Ex-Im financing if they didn’t feel it was critical to getting that actual export out the door.

HH: Okay, we’ve got about a minute to the break, Tim. Do you agree with that? No one would, he makes a great point. Nobody wants this unless you have to do it.

TC: Well, I mean, the fact that you see so many businesses today lobbying for it, including the banks, by the way, the banks love it and they say oh, it’s because we don’t compete with them. Well, the banks get loan guarantees. And that’s something they absolutely love. And for a lot of exporters, it is, we wouldn’t have private sector financing. I don’t think that’s always true. But when it is true, that’s an indication that the market is rejecting this deal. And guess what? You’ve got a great idea? You want to sell to Africa? If there’s not a market for it, well, that’s a sign. And we believe that market prices set signals, and they bring the highest, most worthy stuff up to the top. If government’s tweaking that, then things, other things are rising to the top, and something else is getting left on the side.

HH: Other issues are then coming into play.

DR: Yeah, but domestic lenders are under a lot of pressure. Domestic regulatory requirements are something called basil 3, which influences how much their reserves are set aside. The lenders, trust me, if they could do a deal without Ex-Im Bank, they would, because it often takes longer than it would if they were doing it themselves, number one. Number two, it’s true that they love the guarantee, but there’s also a cost element of using Ex-Im Bank, because how is it that Ex-Im Bank isn’t a drain on the Treasury? Every transaction involves what’s called an exposure fee that is paid by the borrower to Ex-Im Bank in order to get the benefit of that guaranteed loan. So it would be cheaper to do it with a bank if you could.

HH: When we come back, we’ll continue this. As Tim Carney noted, Kevin McCarthy, the House GOP Leader, is sort of against the Ex-Im Bank. John Boehner, the Speaker of the House, is sort of for the Ex-Im Bank. I’ve never seen an issue actually this obscure divide Republicans so deeply. But we’ll continue to talk with Dan Renberg of Arent Fox, Tim Carney of the Washington Examiner and AEI when we return to the Hugh Hewitt Show.

— – – – –

HH: Let me go to my big issue. First person I worked for out of college, Richard Nixon, everything matters in foreign affairs. And so Tim Carney, I’ll put it to you. If we don’t do this lending, if we do not provide foreign buyers with export credits, China and Russia will do so. They already do it, and we will yield geopolitical turf to our near-peer competitors. They will take advantage of that, and American national interests will suffer.

TC: The problem with that argument is that Export-Import Bank is not created to be a foreign policy tool. I mean, I guess when FDR first created it, that was some of the point. But if you read all the defenses on the Export-Import Bank website, or you know, the paid advocates for it like Tony Fratto, he’ll never say this is a foreign aid tool or a foreign policy tool. They never say that at the conference, because it’s an agency that’s not calibrated to do it. So if you were to tell me we’re going to have a foreign aid tool that’s about getting these guys to do business with America for the sake of fostering these policies, well, that’s outside my area of expertise. But these guys, they pitch it as a U.S. economic boon, and…

HH: But let’s put it in my terms. These guys are not me.

TC: Yeah, okay.

HH: The reason I support it is because that which is a geopolitical tool is a geopolitical tool.

TC: But then it’s a geopolitical tool that’s calibrated to maximize the number of U.S. jobs it creates, and I obviously argue that it doesn’t do that on net. But if that’s how it’s calibrated, it’s not going to be good at foreign aid. If you make a machine and what it’s supposed to do is chip ice for serving on fish, it’s not going to be good at doing other things. It might not be good at making your frozen daiquiri, even though it kind of does a similar thing. So it’s not calibrated as a foreign policy tool. And so defending it on those grounds is defending it for something for which it was not created. And you often see that it undermines U.S. foreign policy, that Russian banks that have been tied with the regime, not just tied with the regime in Russia, but tied with arms sales or arms dealers, that they were getting Export-Import Bank financing. The government of China, in fact, the Export-Import Bank of China gets direct loans and loan guarantees from the U.S. Export-Import Bank. All these deals that slightly undermine foreign policy happen because the bank isn’t trying to advance our foreign policy.

HH: Now Dan Renberg, the realists will admit what Tim just said. There are occasionally deals that make me scratch my head. But overall, I mean, I don’t think anyone argues with me my overall point that whether or not it was created to advance American interests in the world, it does.

DR: Oh, I think it does, Hugh. And at times, there have been deals that have been embarrassing, no question about it, over the 80 years. I think that the role it plays is to open up and deepen trade ties. It’s wonderful when U.S. goods and services are in these foreign countries, these developing nations, and in particular, helping pry open the marketplace for us, and sometimes, it starts out in these developing markets where if it weren’t for the faith of Ex-Im Bank’s underwriters that they could make a repayment, those goods and services aren’t going to be provided, and they’re going to be in either A) the dark ages, or B) they’re going to be buying form someone else who’s going to end up having more influence. You know, when I was on the board, I remember that one of the issues that came up once involved a deal that came up in something called the Chafee Amendment. That Chafee Amendment meant that Secretary of State Albright at the time was able to actually put the kibosh on a deal for a period of time. So there’s definitely statutorally a recognition that there is a foreign policy aspect to this. I think that when I had the privilege of traveling to Mexico and to Sofia, Bulgaria for a day, I was in Sofia, I felt like I was advancing the ball for our country’s foreign policy. What’s important, you know, we talked about what the other, China, Russia, it’s more than that. Korea is doing far more in official export credits than the Ex-Im Bank, and their economy is one-tenth the size. So I’m, Ex-Im Bank is not a perfect institution. There’s no government agency that is. And if the Treasury Department worked harder within the OECD to get all official export credits and unregulated credits down, there wouldn’t be as much of a crying need for what Ex-Im Bank does. But until that time, I’m not a fan of unilateral disarmament.

HH: All right, now I want to go to the argument that Tim made that Export-Import people do put forward all the time, that it creates American jobs. And Tim has already brought up, I think, the 165,000 number. Is that what the Export-Import alliance says they create?

TC: Yeah, they have big numbers like that, yeah.

HH: Do you believe those numbers, Dan Renberg?

DR: Yeah, I believe it, because it’s based on a multiplier at either the Commerce Department or the Labor Department. Forgive me, it’s been a dozen years since I was there. Ex-Im Bank uses a multiplier from another federal agency, if I’m not mistaken, that says for this kind of export transaction, this number of dollars sustains this number of U.S. jobs. So that’s where it comes from.

TC: So, but the GAO has pointed to that exact multiplier.

HH: The General Accounting Office.

TC: Sorry, the Government Accountability Office.

HH: Government…

TC: It has a new name, yes.

DR: Hugh’s showing his age.

HH: I am there.

TC: Yes, yes. And by new, I mean, in the 21st Century. That’s the name. The GAO has said that this multiplier is problematic. For one, it treats full-time, part-time and seasonal jobs equally. Two, it’s based on what the multiplier would have been back in 2002. As the GAO said, or BLS, Bureau of Labor Statistic officials stated that the current economy may be very different from the economy in 2002, which is obvious. But the main problem is not that their math is a little fuzzy, it’s that they are imagining A) that these exports never would have happened without the financing. That is one of the premises of these deals. And that is, that the sales wouldn’t have happened. That’s simply not true. I mean, I could point out a dozen deals where it’s obvious when a solar panel company is selling solar panels to itself, to its own solar farm in Canada, that’s not a deal that wouldn’t have happened. This happened with Caterpillar. This happened with Enron. So a lot of these deals would have happened anyway. And another problem with this argument is that it’s forgetting that again, this redistributes this stuff around the economy. It was an actual defender of Export-Import Bank, The American Action Forum, led by Douglas Holtz-Eakin, a well-known Republican economist. He likes Export-Import Bank. But his think tank said it can’t actually create jobs. It can just redistribute them around the economy. So that’s the main problem I have with this…

HH: Redistribute around the economy, that brings me to the president of General Electric making a speech saying I can redistribute my jobs around the world. Now we’re all free market guys. All three of us are free market guys. If you’re the head of GE, I’m going to make my turbines, maybe I’ll take them out of Ohio and make them in Korea if Korea will pay me to make them. That’s a free market, value maximizing CEO, isn’t it, Tim?

TC: Yeah, I mean, I think it’s embarrassing for a CEO to say give me more subsidies or I’m going to move them overseas.

HH: Why? That’s economic rational…

TC: That’s effectively what he’s saying.

HH: But, yes it is, but it’s rational behavior, isn’t it?

TC: It’s rational behavior, but I also think it’s shameful, and I say this a lot in writing. When, if I’m against corporate welfare. The primary blame lies with the politician. The secondary blame lies with the statesmen who go out and they ask for the handouts from the government, I mean, with the businessmen who ask for the handouts. And I don’t think CEO’s should be doing this.

HH: But this is, and I’ll come back and I’ll start with you in the next segment, Dan, so you can respond.

DR: No, I’m enjoying it.

HH: As an Austrian guy, as an Austrian economics guy, Tim, the idea of morals coloring your conversation, that makes me, my eyebrows go up, because most of the Austrian economic school, they reject morality in these. They just tell the CEO go value maximize.

TC: Maybe. I mean, I don’t know that I describe myself as an Austrian guy. I describe myself as a free market guy, and I would say yeah, you have, without morality, the free market can’t stand.

HH: How interesting, because I never made that argument before.

— – — –

HH: Dan Renberg, when we went to break, Tim Carney and I were talking about the morality of the Ex-Im Bank. And I am just a CEO/free market/maximizing value guy. What did you think of that exchange?

DR: I was fascinated. I think you were talking about Austrian economics. My family hails from Germany, so you know, I’m obviously conflicted. I think that the first thing, we were playing word association, almost. You were talking about morality, and earlier, Tim mentioned a moral underpinning. When I think of morality in this context, I think of it would be immoral for our government not to do everything it can to support the creation and preservation of American jobs. And I don’t mean to get up on a soapbox, but I really believe that as long as these other countries are doing it to the extent they are, both regulated export credits and unregulated, where they can basically do it at 0% for 40 years and win the deals for their government’s constituents, I’m fearful that we’re being immoral if we cut it off. And I don’t know, I don’t know a better way to describe it, but I’ve done these tours where I’ve gone into the companies, small businesses, medium-sized businesses, and I’ve heard people say but for the Ex-Im Bank financing, this export would not have happened. And I always tried to think when I was on the board, I always tried to think of some employee somewhere in this country, maybe works on a line at the Deere Works in Waterloo, Iowa, and I thought maybe that guy is able to buy a better baseball glove for his 8 year old son. And you know, at the time, I was doing coach pitch and stuff with my kid. And I just kept thinking like if it weren’t for the ability of our board to say yes on an export transaction financing, that guy isn’t in the best position to purchase medicine for a parent, or to purchase a mitt for his kid. And to me, that’s part of the morality.

HH: Tim Carney?

TC: There were very good dads, I’m sure, who worked at Solyndra who wanted to buy a better mitt for their kids, and that the Department of Energy’s loan guarantees enabled that. When back 120 years ago, there were people who made buggy whips, and they wanted to provide better food for their dads, and that allowing Ford Motor to come in and drive them out of business, well, that hurt them, and that hurt their ability to buy better mitts for their sons. And it’s the same thing with any industry that gets government favors or government protection. There are good people in that industry, and they have good jobs. And the government can protect those jobs, you know, protect the guy who works at the restaurant by outlawing food trucks, protect the cabbie by outlawing Uber. This can happen in all sorts of ways, and that there are good people who benefit from a subsidy doesn’t say that it’s a good program, because the argument that I make, because from a free market perspective, is that on net, there will be more jobs cost. And if you look at specifically the way it’s transferring jobs, some of it is from one export to another, some of it is from just regular domestic sales to exports, but ultimately, the broader picture, when government is growing in this way, and the government is helping some industries and not the other, even the best-intentioned agencies, your political connections won’t matter. Did you hire the right consultants in Washington? Do you have a lobbyist who is a former congressman? And so suddenly, on net, what you’re doing is you’re transferring wealth from the sort of free market economy to the crony economy, from states to Washington, D.C.

HH: And so let me break in. What he just did there was very interesting, because it’s, if Export-Import is not reauthorized, Solyndra will have killed it. That’s my view of it, because even though Solyndra has nothing to do with Export-Import, it brought forward the idea of crony capitalism.

TC: Except Solyndra did get an Export-Import Bank subsidy to sell to Brussels.

HH: Okay, agreed, but it wasn’t what made Solyndra the disaster.

TC: Yeah, absolutely.

HH: So Solyndra was given a massive amount of money without any accountability, without underwriting, as Dan pointed out last week. Export-Import is pretty good on their underwriting. But what’s interesting is it’s sort of the cutting edge of the big, anti-big government people, of which I am one, Dan Renberg. They want a pelt on the wall. So what does Export-Import Bank argue that we’re not the right pelt? What’s their argument?

DR: I think that those are the same people who probably supported Reagan when he talked about getting stronger in order to bring the Soviet Union down. I was hoping, and I know this sounds like heresy at this point in the debate, and I don’t mean our debate, but just over the last couple of years, I was hoping that this reauthorization legislation would help loosen some shackles on the U.S. Export-Import Bank so it could become even more beneficial to U.S. companies. Other countries like Italy and Canada have almost gotten rid of the notion of something has to be made in that country in order for them to qualify for financing. There, I was hoping, you know, we could take another look at the domestic content, which has been something that many exporters have said holds them back. The technology industry could probably use Ex-Im Bank more readily if it had some tweaks. So I was really hopeful that what we would do is strengthen U.S. Ex-Im Bank in order to bring those other countries to their knees at the OECD.

HH: And 90 seconds, Tim Carney.

TC: Well, one thing to realize is that these countries, their subsidies, they often hurt our businesses. No doubt, when Europe subsidizes Airbus, that hurts Boeing. But the bigger thing they do is they hurt their own economies. There was a study by London School of Economics economist presented at the Royal Economic Society that China hurts its own economy by 3% with its export subsidies.

— – – – –

HH: The Republican Party is divided on this. And Dan Renberg, I don’t get it. And Tim and I just disagree on this. I think Republicans are crazy to make this the poster child for slimming down the government, because it hurts our national…in an era where we’re talking about American strength, and we’re blasting Obama for American retreat, I don’t think this is where the Republicans want to be. What is the politics right now of reauthorizing the Export-Import Bank? Are the internationalists winning? Or are the Austrian economics/free market people winning?

DR: Well, it seems to change on an almost daily basis, Hugh. I think that my prediction is that the Senate needs to act, and then the House needs to respond in some way. I haven’t heard that Chairman is willing to move a clean reauthorization bill, or even one with some reforms. So until that time, I’m looking to the Senate to maybe show some leadership on this issue, and then give the House something to consider in due course. We still have time. June 30th is the sunset date. And it’s important for our listeners to know that this isn’t like a continuing resolution where the government can just keep going until an approps bill is done. Ex-Im Bank has to affirmatively be extended by some piece of legislation by June 30th, or else it’ll cease to be able to honor new requests.

HH: Tim Carney, I was told last week by a lot of congressmen this, and Chairman Hensarling is a friend of the show, that this was Chairman Hensarling’s wedge issue into the combat with Kevin McCarthy, which is why Kevin McCarthy came around to his point of view, and that Ex-Im is really a hostage to internal caucus politics, not really where we should be expending our efforts to minimize and lower government. What do you think?

TC: You see, I disagree. I think Ex-Im is the Republicans starting to realize, especially after the 2012 election, that to make a credible argument on free enterprise, you have to take aim at crony capitalism, that just if you look at the electoral map, you want to win blue collar voters in places like Ohio and Pennsylvania and Iowa, and Minnesota or Wisconsin. You’re going to have to show that you’re not just sticking up for the fat cats. Republicans haven’t historically shown that. And often, they sometimes do stick up for the fat cats. And so to go ahead and say that we are going to get rid of this agency that subsidizes big banks lending to big foreign companies mostly buying from a handful of U.S. companies, again, I think 65% go to the five biggest recipients, that if you stand up for that, A) that makes it so that the business lobby won’t come asking for as many favors, maybe, but B) maybe more importantly, it provides a real moral underpinning that we’re saying that we believe in the free market not because it enriches our big business friends, but because it’s a fair and open way. And that when government gets involved, why do we oppose government intervention, because it tilts the playing field in the direction of those with connections to power.

DR: You know, Hugh, I don’t want to be seen as an apologist for corporate America, because I see the flaws myself. But I must say this. It wouldn’t surprise me if many of the people that Tim is referring to have retirement funds that are invested extensively in some of the very companies that do benefit from the Ex-Im Bank. It wouldn’t surprise me if the thrift savings plan that the members of Congress and their staffs invest in, their equivalent of the 401k that the government runs, they’re probably benefiting, too. While there may be some corporate executives who are very highly paid in our society, at the end of the day, there are a lot of smaller cats, if you will, who are benefiting from the fact that Ex-Im Bank has facilitated exports that under this statute should not have occurred but for Ex-Im Bank’s involvement.

HH: And Tim, I go back to this, too. I don’t think of big companies as fat cats unless you’re talking about hedge funds. Hedge funds, you know, if you want to talk about billionaires, I’m with you on that. But if you’re GE, if you’re Boeing, you’re not fat cats. You’re big companies that employ tens of thousands of Americans making products that drive, in the case of Boeing in the American national security envelope, which is very important to we three sitting in this room. So I wonder if the language of the Tea Party hasn’t been misdirected here, that you guys opened fire, not you guys meaning Tim Carney, but the Tea Party opened fire on Export because it was a handy target to try and trot out the crony capitalism. And it’s not Solyndra. It’s been around since 1934. Crony capitalism was intended to get the Solyndras, not these ice makers.

TC: I mean, no, I mean, I think that Solyndra and Ex-Im are of a type, except you know, probably Ex-Im, as you said, does better underwriting. But they are favoring some companies. If these companies are benefiting, and the people who invest in them are benefiting, well, other companies are suffering. And the fact is that Boeing, I mean, it’s got an 8 year backlog. I love, Boeing makes better airplanes than Airbus. It will continue to sell. Its decrease in sales will be fairly small, but that it will no longer getting sales because of political connections. It’ll be getting all of its sales because of markets.

HH: I’ve got to stop you, because in ten years, China Air will take 50% of that market. They will be a minority shareholder, or a minority seller into the market. I don’t represent Boeing. I just studied up on the Boeing stuff. They will really get hammered by this.

DR: Hugh, maybe if I can ask a question. I certainly don’t want to sound argumentative. RFP’s, request for proposals from foreign countries, from governments, from state-owned businesses, from private sector enterprises, quite often put in as one of the criteria for the decisions that there needs to be export credit agency financing. I’m not sure how the U.S. users of Ex-Im Bank will be able to compete in this new perfect world when the RFP’s require you to bring to the table. That’s why GE’s executive might have said we’ll have no choice but to move offshore to a country that does have official export credits, otherwise GE can’t actually sell. I just don’t know what we’re going to do when the RFP’s require it, and our Ex-Im Bank doesn’t exist.

TC: I’d like to see sort of what portion of, because I know Siemens and GE, they do these big energy products, and the foreign buyers do demand the export credit.

HH: Oh, I didn’t know that.

TC: First is this indicates that a lot of the subsidy ends up going to the foreign buyers. Why are they demanding it? Because they get some of the subsidy. And second of all, it’s a sort of hostage-taking demand that we shouldn’t be happy about, that they are saying oh, we’re not going to do business with you unless you put your own taxpayers on the line. And sometimes, in some of these, they’re U.S. companies that are involved with the foreign companies. I think Dow Chemical was involved in a chemical plant that was making a similar demand. Just because these foreign governments are demanding it, we subsidize their energy projects, it doesn’t mean that that’s good. And I know that it does lead to more work and more profits for these big energy companies, but it’s the sort of thing that they’re asking for it because they know that we can provide it.

HH: Dan, you get the last minute.

DR: Well, thank you. I think that Ex-Im Bank has not shown that it needs to be put out of Tim’s misery. I think that it’s important for Ex-Im to have another shot at this, to be reauthorize for four or five years to have some stability, and for Congress to look at the potential for some reforms. It’s not a perfect agency, as I said earlier. But to just put it out, to take it out back and shoot it in the head behind a blanket, that’s not right. I don’t think that’s moral.

HH: I also don’t know where this is going, but I know I’ll have you both back. Tim Carney from the Washington Examiner and the American Enterprise Institute, Dan Renberg from Arent Fox, thank you, both. Ex-Im, it’s obscure, but boy, is it important to thousands and thousands of Americans whose jobs depend on it.

End of interview.

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