Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
2Activity
0 of .
Results for:
No results containing your search query
P. 1
AFP Ex-Im Public Comment

AFP Ex-Im Public Comment

Ratings: (0)|Views: 205 |Likes:
Published by idiosynchrissy

More info:

Published by: idiosynchrissy on Aug 20, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

07/17/2013

pdf

text

original

 
 
Export-Import Bank of the United StatesDocket Number: EIB-2012-0017Docket Name: Sale of Commercial Aircraft to NorwayDate: August 21, 2012
Americans for Prosperity Comments Regarding:
 
Proposed Application to the Export-Import Bank of the United States for Final Commitment for a Long-Term Loan orFinancial Guarantee in Excess of $100 Million
To Whom It May Concern:Americans for Prosperity (AFP) is a free market non-profit organization that is committed toeducating and engaging grassroots citizen activists across the country to advocate for smallergovernment, lower taxes, and free enterprise. We believe that the free market is and always hasbeen the best path to prosperity. Currently, AFP has over 2.1 million activists in all 50 states,including our 34 state chapters and affiliate states.It is in this context that AFP submits comments in regard to the proposed application to theExport-Import Bank of the United States
(“Ex
-
Im Bank”) for final commitment for a long
-termloan or financial guarantee in excess of $100 million.
1
AFP is opposed to this application, anddeeply concerned about the practice of lending money and extending credit to foreign companiesthat buy U.S. exports.
Executive Order 12866 Regulatory Philosophy
Before policymakers decide to extend credit to foreign firms, they should think first whether thisis already being provided in the market. This is in accordance with the Regulatory Philosophyexpressed in Executive Order 12866 §1(a):Federal agencies should promulgate only such regulations as are required by law, arenecessary to interpret the law, or are made necessary by
compelling public need, such asmaterial failures of private markets
to protect or improve the health and safety of thepublic, the environment, or the well-being of the American people: In deciding whetherand how to regulate, agencies should assess all costs and benefits of available regulatoryalternatives,
including the alternative of not regulating
. [Emphasis added]
1
https://www.federalregister.gov/articles/2012/07/27/2012-18349/application-for-long-term-loan-or-financial-guarantee#p-12
 
Supporters argue that Ex-Im Bank is necessary because it extends loans to firms when the privatesector is unable or unwilling to do so. However, evidence that shows that subsidizing exportsdoes not lead to job growth. According to the Congressio
nal Research Service, there is “
littletheoretical support or empirical evidence that supports claims that subsidizing exports oroverseas investment offers a positive net gain in jobs to the U.S. economy.
2
 Furthermore,
“That assertion flies in the face of the claim that the bank only invests in ‘sure bets’
an
d that taxpayers’
money is safe,
Cato Institute policy analyst Sallie James points out.
3
If aparticular project were truly a sound investment, then entrepreneurs and investors would takerisks and bear the cost burden
. Hardworking taxpayers’ money wouldn’t be necessary. If a
project were too risky to find credit in the private sector, then the Ex-Im Bank puts taxpayermoney in too much risk.On the contrary, there exist no apparent impediments that could lead to market failure (i.e.,natural monopolies, externalities,
information asymmetry, missing “infrastructure”
of marketprocesses, policy impediments to markets). It is not clear from the application
what “compelling public need,” or “material failures of private markets” justifies the proposed requirements.
Considering all this, AFP disagrees that the acceptance of this application would be consistentwith the Executive Order 12866 Regulatory Philosophy.
Corporate Welfare
 
The Ex-Im Bank has nicknames that connote what it really does
 —it’s called “
a corporate welfareslush fund
,”
4
 
the Fannie Mae for exporters
,”
5
 
and the “Boeing Bank.” Even President
Obamasaid the b
ank was “little more than
a fund for corporate
welfare,” when campaigning for 
president in late 2008. Indeed, the Ex-Im Bank embodies the practice of allowing the federalgovernment to attempt to subvert the market by picking winners and losers. It gives money to asmall number of politically-connected companies and industries, and then passes the cost ontotaxpayers.The biggest beneficiary by far is Boeing, which is the domestic beneficiary of this particularapplication. The Boeing Company received 44 percent of the total loans and long-termguarantees that Ex-Im Bank extended in FY2010. Last year alone, Ex-Im Bank provided morethan $11.4 billion to foreign airlines to purchase Boeing airplanes.AFP is strongly opposed to the practice of using taxpayer resources to prop up particularcompanies or industries. Firms should compete on a playing field that favors none of the players.
2
James K. Jackson, "OPIC: Employment and Other Economic Effects," Congressional Research Service
Report for Congress
, May 23, 1997.
3
Sallie James
. (March 14, 2012) “
Expanding Ex-Im's Mandate Is A Big Mistake
.”
Free Trade Bulletin no. 48.
CatoInstitute. <http://www.cato.org/publications/free-trade-bulletin/expanding-exims-mandate-is-big-mistake>
4
Tim Carney. Washington Examiner. <http://washingtonexaminer.com/politics/beltway-confidential/2011/03/john-kerry%E2%80%99s-%E2%80%98infrastructure-bank%E2%80%99-corporate-welfare-slush>
5
<http://cdn.breitbart.com/Big-Government/2012/03/19/congress-should-reform-or-eliminate-the-ex-im-bank-not-give-it-more-money>
 
 
Harms to Domestic Firms
As George Will recently observed in the
Washington Post 
, “[W]hile
picking American winners,the Export-
Import Bank creates American losers.”
6
Extending credit to foreign companies endsup hurting American firms, since they cannot purchase a particular good as cheaply as theirforeign competitors. In the airline industry, this practice ends up putting U.S. companies, such asDelta and U.S. Air, at a disadvantage because they are forced to pay more for their Boeing planesthan their foreign competitors do.
It’s been estimated that
Ex-Im costs the U.S. airline industry asmuch as 7,500 jobs and $684 million annually.
7
 
Harms to U.S. Taxpayers
Domestic competitors aren’t the only ones hurt by the Ex
-Im Bank 
 — 
hardworking taxpayers andconsumers are hurt too. When the government gives a particular company or industry a specialbreak, it shifts the tax burden to those who remain in the tax base.If Ex-Im approves this application to finance the sale of a Boeing planes to Norwegian AirShuttle ASA, then U.S. taxpayers bear all the risk.If the Norwegian firm defaults on the loan,then taxpayers will be on the hook to ensure that Boeing gets paid.AFP is concerned that few safeguards, if any, exist for taxpayers. If a foreign firm that receivesfinancing assistance from the bank defaults on the loan, there may not be a way to recover themoney.
Free Market Alternatives
Boosting exports is the ostensible purpose of the Ex-Im Bank, according to Section Sec. 2(a)(1)of the Charter, but the free market would better serve this end. Firms in the private sector canstep in and extend credit without burdening taxpayers and obstructing free trade. To accomplishthis goal of increasing exports, the federal government should focus on policies that reduceregulatory barriers to foreign investment. Cutting the federal corporate tax rate would be a greatstart, since it discourages businesses from opening their doors here.Section Sec. 2(a)(1) of the Charter also establishes the objective to contribute to maintaining orincreasing employment of United States workers, but this, too, could be better achieved in thefree market. Whenever the government subsidizes an activity, it comes at the expense of otheractivities. This is because time, money, and resources are scarce and finite. By subsidizingexports, the federal government incites individuals and businesses in the United States to divertresources from other productive uses and invest them in activities for which they have a higheropportunity cost than others. As a result, the economy loses marginal levels of productivity.
6
http://www.washingtonpost.com/opinions/export-import-banks-damage-to-american-firms/2012/03/15/gIQAFDSNHS_story.html
7
 
The Export Subsidy Boomerang
.”
Wall Street Journal.
3 March 2012.<http://online.wsj.com/article/SB10001424052970204653604577249490813387030.html>

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->