The JOBS Act is stuck in the Senate, and it appears increasingly unlikely that this package of bills aimed at making it easier for start-ups to access capital will survive. One of the big sticking points is a rather small thing in the grander scheme of government: the fate of the Export-Import Bank.
This has Eric Cantor upset:
Over the past week, Leader Reid and Senate Democrats have worked overtime to find excuses not to pass the bipartisan JOBS Act despite support of 390 members in the House, the President, and job creators across the country. Rather than making 11th hour claims about phantom investor protection issues or adding partisan amendments like the Ex-Im Bank reauthorization that threaten to derail the bill, the Senate should pass the JOBS Act and get it to the President’s desk immediately.
Mr. Reid is merely playing the political percentages. He can’t afford to have anything pass that would even remotely curtail either of the decade’s major financial “reform” laws, Dodd-Frank and Sarbanes-Oxley. The remaining Occupiers wouldn’t like that in the least. Nor can he afford to give Cantor and the House Republicans a clean win — that’s just not done in an election year.
Hence his Export-Import Bank gambit. Extending and expanding the Bank’s life has Republican support — including Sens. Lindsey Graham and Richard Shelby. Those who think the Bank is little more than corporate welfare (including Sens. Jim DeMint, Mike Lee, Marco Rubio, Pat Toomey and Rand Paul) want it killed. The GOP is split.
But that’s not the end of the splitting and fracturing. Groups like the Heritage Foundation and the Club for Growth, who want the Bank closed, are pitted against the U.S. Chamber of Commerce, which wants it to remain open, and even bigger. It’s caused rifts between businesses, too, as Boeing, a major beneficiary of Ex-Im largesse, and Delta Airlines are swinging at each other — and each other’s lobbyists.
Not to be outdone, the Ex-Im Bank’s head says ending the subsidy gravy train could cost thousands of U.S. jobs every day:
“While we here in the United States are wringing our hands, our competitors are licking their chops,” said Fred Hochberg, the chairman of ExIm and an Obama administration appointee. “At risk are 1,000 American jobs for each working day of the year.”
This is patent nonsense. Cato’s Sallie James reminds us how the Bank got its start and what it has become:
The bank was first established in the 1930s to finance exports to the Soviet Union, but long after the fall of Communism it still exists, picking favorites among U.S. producers. It has special programs for certain industries, acting as a sort of financier of industrial policy, and puts its financial muscle behind politically connected firms, leaving taxpayers exposed to tens of billions of dollars of potential losses on loan guarantees.
So who reaps these special favors?
One of those chosen firms, incidentally, was Solyndra — the notorious and now-bankrupt company into which the U.S. government sunk more than $500 million of taxpayers’ money in subsidies and loan guarantees. According to the Ex-Im Bank’s 2011 Annual Report, Solyndra received a $10 million loan guarantee from Ex-Im, which financed a sale of Solyndra products to a customer in Belgium.
Into this mess steps Cantor, who has been given the thankless task of trying to forge a compromise. From Politico:
…what’s emerged is a draft 38-page bill that allows for a one-year extension and a loan cap of $113 billion through fiscal 2013 — just a third of the increase proposed by the Senate.
He doesn’t seek to end the Ex-Im Bank — which should be the ultimate goal, but taps the brakes on its growth and extends it just long enough so that a (presumably Republican-controlled) Congress can take the matter up again after the election.
That won’t please anyone…which could mean it has the best chance of actually coming to pass.
