Source: https://www.scribd.com/document/103347950/AFP-Ex-Im-Public-Comment
Timestamp: 2016-10-25 06:14:07
Document Index: 379040258

Matched Legal Cases: ['§1', 'art 4', 'art 1', 'art 2', 'art 2', 'art 1']

BrowseBrowseInterestsBiography & MemoirBusiness & LeadershipFiction & LiteraturePolitics & EconomyHealth & WellnessSociety & CultureHappiness & Self-HelpMystery, Thriller & CrimeHistoryYoung AdultBrowse byBooksAudiobooksComicsSheet MusicBrowse allUploadSign inJoinBooksAudiobooksComicsSheet MusicAFP Ex-Im Public CommentUploaded by idiosynchrissyExportBankFree MarketExport Import Bank Of The United States206 viewsDownloadEmbedSee MoreCopyright: Attribution Non-Commercial (BY-NC)Download as PDF, TXT or read online from ScribdFlag for inappropriate contentExport-Import Bank of the United States Docket Number: EIB-2012-0017 Docket Name: Sale of CommercialAircraft to Norway Date: August 21, 2012 Americans for Prosperity Comments Regarding: Proposed Application to the ExportImport Bank of the United States for Final Commitment for a Long-Term Loan or Financial 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 to educating and engaging grassroots citizen activists across the country to advocate for smaller government, lower taxes, and free enterprise. We believe that the free market is and always has been 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 the Export-Import Bank of the United States (“Ex-Im Bank”) for final commitment for a long-term loan or financial guarantee in excess of $100 million.1 AFP is opposed to this application, and deeply concerned about the practice of lending money and extending credit to foreign companies that buy U.S. exports. Executive Order 12866 Regulatory Philosophy Before policymakers decide to extend credit to foreign firms, they should think first whether this is already being provided in the market. This is in accordance with the Regulatory Philosophy expressed in Executive Order 12866 §1(a): Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people: In deciding whether and how to regulate, agencies should assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating. [Emphasis added]
https://www.federalregister.gov/articles/2012/07/27/2012-18349/application-for-long-term-loan-or-financialguarantee#p-12
Supporters argue that Ex-Im Bank is necessary because it extends loans to firms when the private sector is unable or unwilling to do so. However, evidence that shows that subsidizing exports does not lead to job growth. According to the Congressional Research Service, there is “little theoretical support or empirical evidence that supports claims that subsidizing exports or overseas 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’ and that taxpayers’ money is safe,” Cato Institute policy analyst Sallie James points out.3 If a particular project were truly a sound investment, then entrepreneurs and investors would take risks 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 taxpayer money 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 market processes, 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 consistent with 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 welfare slush fund,”4 “the Fannie Mae for exporters,”5 and the “Boeing Bank.” Even President Obama said the bank 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 federal government to attempt to subvert the market by picking winners and losers. It gives money to a small number of politically-connected companies and industries, and then passes the cost onto taxpayers. The biggest beneficiary by far is Boeing, which is the domestic beneficiary of this particular application. The Boeing Company received 44 percent of the total loans and long-term guarantees that Ex-Im Bank extended in FY2010. Last year alone, Ex-Im Bank provided more than $11.4 billion to foreign airlines to purchase Boeing airplanes. AFP is strongly opposed to the practice of using taxpayer resources to prop up particular companies or industries. Firms should compete on a playing field that favors none of the players.
James K. Jackson, "OPIC: Employment and Other Economic Effects," Congressional Research Service Report for Congress, May 23, 1997.
Sallie James. (March 14, 2012) “Expanding Ex-Im's Mandate Is A Big Mistake.” Free Trade Bulletin no. 48. Cato Institute. <http://www.cato.org/publications/free-trade-bulletin/expanding-exims-mandate-is-big-mistake> 4 Tim Carney. Washington Examiner. <http://washingtonexaminer.com/politics/beltwayconfidential/2011/03/john-kerry%E2%80%99s-%E2%80%98infrastructure-bank%E2%80%99-corporate-welfareslush> 5 <http://cdn.breitbart.com/Big-Government/2012/03/19/congress-should-reform-or-eliminate-the-ex-im-banknot-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 ends up hurting American firms, since they cannot purchase a particular good as cheaply as their foreign competitors. In the airline industry, this practice ends up putting U.S. companies, such as Delta and U.S. Air, at a disadvantage because they are forced to pay more for their Boeing planes than their foreign competitors do. It’s been estimated that Ex-Im costs the U.S. airline industry as much 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 and consumers are hurt too. When the government gives a particular company or industry a special break, 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 Air Shuttle 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 receives financing assistance from the bank defaults on the loan, there may not be a way to recover the money. 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 can step in and extend credit without burdening taxpayers and obstructing free trade. To accomplish this goal of increasing exports, the federal government should focus on policies that reduce regulatory barriers to foreign investment. Cutting the federal corporate tax rate would be a great start, 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 or increasing employment of United States workers, but this, too, could be better achieved in the free market. Whenever the government subsidizes an activity, it comes at the expense of other activities. This is because time, money, and resources are scarce and finite. By subsidizing exports, the federal government incites individuals and businesses in the United States to divert resources from other productive uses and invest them in activities for which they have a higher opportunity cost than others. As a result, the economy loses marginal levels of productivity.
http://www.washingtonpost.com/opinions/export-import-banks-damage-to-americanfirms/2012/03/15/gIQAFDSNHS_story.html 7 “The Export Subsidy Boomerang.” Wall Street Journal. 3 March 2012. <http://online.wsj.com/article/SB10001424052970204653604577249490813387030.html>
Proponents of extending credit to foreign firms argue that other countries will extend credit if we don’t, and that this will encourage foreign companies to stop buying exports from the United States. However, in the words of Sallie James of the Cato Institute, this is a “misguided mercantilist worldview in which foreign governments’ subsidies are seen as something to lament and correct.”8 Even if other nations continue to extend credit to boost their exports, the United States would be better off if it didn’t do the same—because it benefits from the lower import prices that those subsidies create, without it costing hardworking American taxpayers a dime. Allowing the unrestricted free market to allocate resources efficiently is better way to encourage exports than financing exports. Government should focus on providing the basic institutions that foster reliable market exchange, instead of meddling in the economy in the name of encouraging exports. Conclusion AFP is wary of the Ex-Im Bank’s actions. We urge the Agency to consider: the unnecessary role of the government in free trade, the harms to domestic producers and taxpayers, and the free market alternatives to the policy. Thank you for considering my comments on the proposed application. Sincerely, Christine Harbin Federal Policy Analyst Americans for Prosperity
Sallie James. (March 14, 2012) “Expanding Ex-Im's Mandate Is A Big Mistake.” Free Trade Bulletin no. 48. Cato Institute. <http://www.cato.org/publications/free-trade-bulletin/expanding-exims-mandate-is-big-mistake>
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