Democrats frequently accuse Republicans of being the party of big business, but the parties’ respective positions on the Export-Import Bank would seem to belie that narrative.
In an op-ed for The Daily Beast on Sunday, Mercatus Center senior fellow Veronique de Rugy conceded that, “Republicans are indeed big supporters of business interests,” but said, “These days, they are second to the Democrats.”
De Rugy made the claim in reference to a bill recently introduced and unanimously supported by Democrats that would reauthorize the Ex-Im’s charter for 7 years and expand its lending ability by $20 billion.
Democrats “have some explaining to do,” she said, because “the bank’s data show that it overwhelmingly benefits some of the biggest, most politically connected firms in America,” a fact that does not square well with much of the party’s economic rhetoric.
In 2013, for instance, “64 percent of the bank’s activities benefited 10 companies, such as Boeing, General Electric, and Caterpillar,” while mega-bank JP Morgan is “the biggest private lender that benefits from Ex-Im,” de Rugy noted. “This is exactly the kind of favoritism for Wall Street that senator Elizabeth Warren says she opposes.”
And big businesses are not the only target of Democratic ire to benefit from Ex-Im financing. According to de Rugy, “the biggest beneficiary on the foreign buyer side is a company named Pemex,” a Mexican state-owned petroleum company that has received about $7 billion in U.S.-taxpayer-backed financing since 2007.
“I wonder how Democrats reconcile that handout with their well-known anti-fossil fuels stance,” she mused.
Yet not everyone sees the issue in quite those terms. In a print debate published by The New York Times on Monday, Tony Fratto, a former deputy press secretary for President George W. Bush who currently represents the Exporters for Ex-Im Coalition, argued that the bank “is a safe and necessary institution” with bipartisan support in both houses of Congress.
While much is made of the bank’s largest clients, Fratto pointed out that Ex-Im “provides financing for thousands of smaller exporting firms,” most of whom rely on the bank to “[fill] critical gaps in trade finance that won’t be filled by the private sector.”
“Absent the Export-Import Bank,” he asserted. “These firms will suffer immediate harm, losing jobs and opportunity in communities across the country.”
Moreover, he said Ex-Im’s support is often necessary to ensure a level playing field for U.S. companies—even large ones—because most of their foreign rivals have “generous access to home-country financing,” and in some cases, “companies are prohibited from even bidding without the participation of their home-country export credit agency.”
“Among the biggest winners here if the Export-Import bank disappeared,” he concluded. “Would be competitors from Russia, China, and France”—an outcome that both parties are likely keen to avoid.