Betrayed Again and Again — Congress and The Oval Office
This Committee for the Constitution has repeatedly, for over a decade, published articles detailing the violations of the original intention of the Constitution resulting in the current condition of our governments at every level and in every jurisdiction. Manifest in the loss of freedom and the denial of justice for all, government has taxed us without representation while segregating opportunity into the hands of the wealthy and politically powerful. In betraying America, characterized by the repetitive election of liberal politicians, a very few of whom are mentioned in the following articles, the American electorate is ultimately responsible for their current financial and political disastrous circumstance. Electing politicians based on every criteria other than what is their ideology and worldview demonstrated and evinced by their history, ignoring voting records, party platforms, and words from their own mouths, often published and easily available in the public record, the electorate duped by the lies and deceptions of a complicit media initiate their own enslavement.
Diane Katz / @Dianeskatz
July 05, 2014
When the U.S. Chamber of Commerce aligns with a disciple of Fidel Castro and hires a working-class hero to lobby Congress, when a liberal economist like Paul Krugman sympathizes with the CEOs of Boeing, Bechtel, and General Electric, it is obviously not business as usual on Capitol Hill.
Welcome to Ex-Im 2014.
For those with lives beyond the Beltway, “Ex-Im” is shorthand for the Export-Import Bank, an obscure federal agency that doles out billions of dollars in subsidies to foreign firms for the purchase of U.S. exports. Whether to reauthorize the bank’s charter, which expires Sept. 30, is the subject of unexpectedly intense debate in Congress—and the coupling of such strange bedfellows. It has been 80 years since President Franklin D. Roosevelt created the bank by executive order, and in all that time lawmakers have embraced Ex-Im reauthorization by either unanimous consent or voice vote in all but a couple of instances. Never has there been such a concerted effort to end it.
Change in Washington rarely occurs on a grand scale, and ending Ex-Im is a scalable goal at the moment.
This time around, however, critics of cronyism have seized on the bank as a practical target of attack against Big Government funneling the spoils of political power to those wielding economic power. The Export-Import Bank is hardly the biggest or worst manifestation of the problem, of course. But change in Washington rarely occurs on a grand scale, and ending Ex-Im is a scalable goal at the moment.
That leaves Ex-Im supporters such as the Chamber, the Business Roundtable, and the National Association of Manufacturers (NAM), to unite with Rep. Maxine Waters and Sen. Chuck Schumer, as well as NAM’s hiring of Dick Gephardt, the former Democratic Majority Leader-turned lobbyist, and (normally) the darling of the blue-collar set. These and other Ex-Im proponents claim export subsidies create jobs and fill “gaps” in private financing. Neither is true.
Moreover, the inspector general and the Government Accountability Office have documented a variety of problems with bank operations, including its failure to conduct economic impact analyses as required by law. Thus, bank officials are sending billions of taxpayer dollars to foreign firms without a meaningful consideration of the effects on American workers and the businesses that employ them.
Ex-Im proponents claim export subsidies create jobs and fill ‘gaps’ in private financing. Neither is true.
In reality, the bank is beset by mismanagement and fraud, and allowing its charter to expire should be an easy call for Congress. There is no shortage of private investment: 98 percent of the estimated $2 trillion in annual U.S. exports are financed without aid from Ex-Im. Even Barack Obama, as a presidential candidate, endorsed ending it.
But the beneficiaries of Ex-Im’s largesse are loathe to relinquish access to so much cheap capital. Last year alone, bank authorizations exceeded $27 billion, bringing taxpayers’ total exposure to nearly $134 billion … at the very least. (Ex-Im’s sloppy record-keeping obscures the actual amount of outstanding commitments.) It is perfectly understandable, of course, that businesses utilize Ex-Im financing. Corporate officers are responsible for maximizing shareholder value—including the retirement investments of millions of American workers. But it is also the responsibility of Congress to do away with preferential treatment for special interests, and to protect taxpayers from unnecessary financial risk. (Every cent of Ex–Im financing is backed by “the full faith and credit of the United States,” which means taxpayers are on the hook for any and all losses that bank reserves fail to cover.)
It is Congress’ responsibility to do away with preferential treatment for special interests, and to protect taxpayers from unnecessary financial risk.
Many in the mainstream press are fixated on the idea that the Tea Party is responsible for this abrupt turn in Ex-Im’s political fortunes. (That’s the very same Tea Party that said press otherwise portrays as disordered and ineffectual.) But the fight actually reflects a much more generalized public vexation with cronyism. Remember Occupy Wall Street? Ever hear Ralph Nader on corporate welfare?
If bank advocates are sincere in wanting to nurture employment and economic growth, they should focus on reducing the tax and regulatory barriers that are choking investment, innovation, and job creation. Ex-Im is a New Deal relic that is both unnecessary and injurious. Notwithstanding the aggressive efforts to save it, Ex-Im reauthorization is in serious doubt. For millions of Americans, it’s about time.
Diane Katz, who has analyzed and written on public policy issues for more than two decades, is a research fellow in regulatory policy at The Heritage Foundation.
July 14, 2014
“Our electricity rates will increase as we pay countries to burn what we no longer can,” Americans for Tax Reform warns of a disconnect between domestic policy and Export-Import Bank loan practices. (Photo: Brendan Wood)
Americans have to pay more for electricity and compete for fewer jobs because of President Obama’s regulatory curbs on fossil fuels at home, even as their tax dollars support expansion of those same energy sources abroad.
The Obama administration last month rolled out its most recent brake on fossil fuels, a 645-page proposed rule to achieve a 30 percent cut in carbon dioxide emissions from power sources by 2030 compared to 2005 levels.
At the same time, the administration pressed for reauthorization this fall of the U.S. Export-Import Bank, a federal agency that offers billions of taxpayer dollars for development of fossil fuels in Russia, Saudi Arabia, Turkey, Mexico and other countries.
In effect, Heritage Foundation policy analyst Diane Katz says, the Obama administration is “imposing a hefty energy tax on Americans” while “subsidizing fossil-fuel projects in foreign countries.”
A gas well in Saudi Arabia. (Photo: Brian O’Donovan/Creative Commons)
In examples The Daily Signal plucked from the Export-Import Bank’s annual reports in the past three years, the federal agency:
- Authorized $633.6 million for U.S. exports to four new fossil-fuel power plants, with an estimated aggregate amount of carbon dioxide (CO2) emissions totaling about 5.87 million metric tons a year. Of that, 3.67 million metric tons will be produced at natural gas-fired plants in Spain, Russia, and Israel, and 2.2 million metric tons will be produced by a coal-fired plant related to a copper-mining project in Mongolia. The bank provided $494.5 million for exports to the project in Mongolia and $32.3 million in “engineering services” for a petroleum refinery in Russia (2013 report, page 26).
- Financed $736 million in export sales to three other new fossil-fuel power plants, two in Turkey and one in Saudi Arabia. The bank estimated the aggregate amount of CO2 emissions would total about 11.3million metric tons a year — 2.1 million metric tons from two gas-fueled, combined-cycle plants in Turkey and 9.2 million metric tons from a similar plant in Saudi Arabia (2012 report, page 26).
- Provided $5 billion for a petrochemical project in Saudi Arabia, described as “engineering and equipment for Sadara Petrochemical Complex” (2012 report, page 9).
- Provided more than $4.5 billion to support mining projects, including $1.2 billion for oil and gas exploration and development projects by Mexico’s national oil company, Pemex (2012 report, page 18).
A design featured on the Sadara-Dow and Aramco Launch Chemical Project Facebook page. (Photo: Facebook)
‘Political Hypocrisy of a High Order’
The Export-Import Bank provides taxpayer-backed loans, loan guarantees, capital, and credit insurance to foreign firms and countries to stimulate purchase of U.S. exports.
When President Obama signed a bill in May 2012 extending the 80-year-old agency’s charter through this Sept. 30, he told an audience of business owners gathered at the White House that the bank would open new avenues for their products overseas: By reauthorizing support for the Export-Import Bank, we’re helping thousands of businesses sell more of their products and services overseas. And in the process, we’re helping them create jobs here at home.
President Obama remarks at an Export-Import Bank Annual Conference. (Photo: Yacouba Tanou/Maxppp/ZUMAPRESS.com)
But some of those products and services will go toward developing the same energy sources that in the U.S. are being hit with a regulatory crackdown by the White House. The intent is to eliminate use of traditional energy sources under the rationale of averting “the catastrophic impacts of climate change” described in the president’s “Climate Change Action Plan.”
“This is political hypocrisy of a high order,” says Katz, a regulatory policy analyst at Heritage who has written extensively about the Ex-Im Bank: The Obama administration effectively is imposing a hefty energy tax on Americans at the very same time it is subsidizing fossil-fuel projects in foreign countries. Both are lousy policy.
The $5 billion in direct loans for Saudi Arabia’s state-owned oil company last week drew the distinction of being named “Egregious Ex-Im Bank Deal of the Day” by the House Financial Services Committee.
A general view shows the Saudi Aramco oil facility in Dammam city. (Photo: Hassan Ammar/AFP/Getty Images)
Rep. Jeb Hensarling, R-Texas, the committee’s chairman, is the leader of a push by conservative lawmakers to deprive Ex-Im of reauthorization when its charter expires Sept. 30. The Heritage Foundation’s lobbying arm, Heritage Action for America, is part of a coalition organized by Americans for Prosperity to argue that Ex-Im’s time is past.
The Daily Signal invited Ex-Im officials to respond to critics for this report and to account for its support in foreign countries of the same kind of fossil-fuel development that the Obama administration restrains in the United States. Despite repeated phone calls and emails, the bank declined to comment.
Higher Electricity Prices, Fewer Jobs
President Franklin Roosevelt created what was then the Export-Import Bank of Washington through an executive order in February 1934. The idea, according to the order, was to “remove obstacles to the free flow of interstate and foreign commerce,” and to boost job creation in the U.S.
Two of today’s biggest supporters of preserving Ex-Im, the U.S. Chamber of Commerce and the National Association of Manufacturers, continue to sound these themes – even while expressing concern about the effect of administration policy on domestic jobs and energy prices. However, critics argue, the bank’s subsidies long have distorted the allocation of labor and capital by imposing political calculations in place of economic decisions.
Under rules proposed by the Environmental Protection Agency, states and power companies must reduce emissions of carbon dioxide by a whopping 30 percent. States must obtain EPA approval of implementation plans that will impose higher energy costs on American families and businesses. The agency’s “flexible” options include expanding renewable energy sources such as wind and solar, implementing energy-efficiency mandates and regulations, and switching from coal to natural gas.
As noted by Heritage Foundation economist Nick Loris, who researches energy and environmental issues, the costs would reverberate across the economy. The phase-out of coal between 2015 and 2023 alone would eliminate 600,000 jobs, computer models show, and the annual income of a family of four would drop more than $1,200 a year.
The U.S. Chamber of Commerce, although a major backer of the Ex-Im Bank, has been a critic of the domestic energy policies to which the bank isn’t bound. A chamber report said the EPA rules would mean $290 billion more in electricity bills by 2030: Higher electricity prices [will] ripple through the economy and reduce discretionary income, which affects consumer behavior, forcing them to delay or forego some purchases or lower their household savings rates.
Ex-Im’s FY 2013 Annual Report shows the bank was not hesitant to offer support for cheap, affordable energy products that the Obama administration is working to restrict in the U.S.
President Obama signs the reauthorization of the Export-Import Bank in 2012. (Photo: Newscom)
Ex-Im “approved a total of 67 loans, guarantees and working capital guarantees and approximately 77 new and renewed export-credit insurance policies to finance U.S. exports related to foreign energy development, production and transmission,” the annual report says, adding: These activities include electric-power generation and transmission, coal mining, oil-and-gas-field exploration and development, production, pipelines and refineries.
Since 2001, Ex–Im has provided $14.8 billion in financial commitments for oil and gas exploration, field development, pipelines, distribution, and refining. A fact sheet from Ex-Im trumpets: “United States equipment and services for the petroleum industry are sought after by the world’s leading companies because of their quality and reliability.”
The bank’s annual report for 2011 noted that it had:
Financed the sale of $1.7 billion in goods and services to five new fossil-fuel power plants. The bank estimated the aggregate amount of CO2 emissions would total about 63.9 million metric tons a year; of that, 56.3 million tons would be from two coal-fired plants projects and 7.7 million tons from three gas-fueled, combined-cycle plants (page 20).
Approved a $2.84 billion direct loan and loan guarantee for a refinery project in Colombia for Refinería de Cartagena S.A. (Reficar), a subsidiary of Ecopetrol S.A., the national oil and gas company. The financing was “part of a $5 billion refinery and upgrade project in Cartagena, from which Reficar will supply petroleum products to the domestic and export markets” (page 9).
However, back home, the administration’s package of EPA rules aimed at staunching global warming or climate change is just the latest in a series of costly regulations aimed at curtailing use of fossil fuels in the United States, Katz and other policy analysts familiar with the changes say.
Alpha Natural Resources, for example, announced it will shut down eight coal mines and eliminate 1,200 jobs as a result of what the company’s CEO called “a regulatory environment that’s aggressively aimed at constraining the use of coal.”
President Obama’s EPA regulations forced 300 American coal-fired power plants to close down. (Photo: Newscom)
Citing environmental concerns, the White House persists in delaying construction of the Keystone XL Pipeline, which would transport oil from Canada to refineries in south Texas. The administration effectively has banned offshore drilling for the next seven years.
Data compiled by the Western Energy Alliance shows federal leasing for oil and gas exploration on land has dried up as well. The end result of the Obama administration’s energy policies at home and abroad is a “lose-lose” for taxpayers, Chris Prandoni, director of energy and environment policy at Americans for Tax Reform, told The Daily Signal. Prandoni says: While President Obama’s EPA was writing regulations that forced 300 American coal-fired power plants to close down, his Export-Import Bank conceded the importance of coal by financing overseas coal development. This lose-lose for the American taxpayer is particularly painful: Our electricity rates will increase as we pay countries to burn what we no longer can.
‘Blind Eye to Sweetheart Loans’
The administration continues to build its case for new regulations around the “politically fashionable” concept of human-induced global warming, but that theory remains “scientifically unproven,” says Bonner Cohen, senior fellow with the National Center for Public Policy Research. This “war on coal,” he said, “is part of a larger war on affordable energy.”
The policy research center compiled a list of the Top 10 Reasons Washington Should Not Impose New Global Warming Laws or Regulations. Figuring prominently on the list is the disparity between climate models and actual scientific observations that show there has been no appreciable global warming since the Clinton administration.
“Under the guise of combating ‘climate change,’ the administration practices crony capitalism and allocates ever-more regulatory power onto itself,” Cohen says, adding:But when it comes to the Ex-Im Bank, it provides taxpayer-backed loans to foreign customers of well-heeled U.S. behemoths, such as Boeing, Caterpillar, and General Electric. And its allegiance to Washington’s powerful administrative agencies leads it to turn a blind eye to the Ex-Im Bank’s sweetheart loans, even if they finance fossil-fuel-related projects the administration would have the world believe endanger the planet.
- Kevin Mooney is an investigative reporter.
- Ken McIntyre, news director of The Daily Signal, contributed to this report.
Melissa Quinn /@MelissaQuinn97
July 07, 2014
Some lawmakers aren’t confident that Fred Hochberg, chairman of the Export-Import Bank, will implement reforms of the agency’s operations. (Photo: Brendan Smialowski/AFP/Getty Images/Newscom)
“Reauthorize with reforms.” That’s the new mantra from supporters of renewing the charter of the Export-Import Bank.
But a review of reforms that Congress ordered the bank to make during the last reauthorization fight shows the agency has done little to remedy issues identified by the lawmakers in 2012.
Some House Republicans view reforms as the main path to extending the Export-Import Bank’s life. Rep. John Campbell, R-Calif., drafted legislation with changes to the Ex-Im Bank that he says would be required parts of the 80-year-old agency’s reauthorization.
But Financial Services Chairman Jeb Hensarling, R-Texas, has been clear about his intention to allow the bank’s charter to expire Sept. 30.
Hensarling and other critics say the agency’s failure to address reforms mandated in 2012 as part of the Export-Import Bank Reauthorization Act demonstrate the bank isn’t likely to adhere to any conditions specified by Congress this year.
Concerns about bank operations prompted Congress to impose new requirements on the bank to increase transparency and accountability. Lawmakers also made step increases in the bank’s annual lending limit — from $120 billion in 2012 up to $140 billion in 2014 — contingent on Ex-Im’s submitting a variety of reports to lawmakers.
A review of those additional requirements, though, shows they failed to remedy mismanagement and dysfunction that critics say put taxpayers’ money at risk.
Diane Katz, a research fellow in regulatory policy at The Heritage Foundation, said officials within the Office of Inspector General and the Government Accountability Office continue to express concerns about bank operations. Recent reports of fraud and other misconduct further undermined the agency’s reputation.
“Taxpayers certainly are justified in worrying about Ex-Im,” Katz said.
Two years ago, Congress required the bank to draft a business plan. The bank submitted a plan, but both GAO and the agency’s inspector general identified weaknesses.
In written testimony to the Financial Services Committee, Ex-Im’s inspector general, Luis Gratacós, said: In order to manage its growing portfolio and to better meet export credit needs of the American exporters, it is our opinion that Ex-Im Bank and Congress can take steps to address some operational weaknesses and challenges facing the bank.
Gratacós previously recommended the bank hire a chief risk officer. It did, but critics note that half the employee’s time is devoted to other responsibilities such as supervising legal and administrative functions.
Its charter requires the bank to meet a small business participation goal of 20 percent of total funding for each designated year. Supporters cite this provision and their contention that 90 percent of bank transactions benefit “small businesses” as key reasons to extend the charter.
Over the the past three years, however, Ex-Im actually has fallen short of the mandated quota. Financing for small business fell from $6 billion in 2011 and 2012 to $5.2 billion in 2013 — less than 20 percent of the total.
Gratacós also told Congress the agency did not meet a renewable energy mandate of 10 percent of annual authorizations. The inspector general attributed the shortfall to “the fact that the total renewable energy export market is not yet large enough to achieve this level relative to the total size of Ex-Im’s bank portfolio.”
During a Financial Services Committee hearing last year, Rep. Mick Mulvaney, R-S.C., pointed to other issues identified by the GAO and inspector general.
Mulvaney said the bank failed to report the default rates of three sub-portfolios–small business, sub-Saharan Africa, and renewable energy–as required under the 2012 reauthorization. He said: It strikes me that if I had read these types of reports about private banks, the banks would probably be shut down by the regulators.
Ex-Im’s chairman, Fred Hochberg, told Mulvaney that the bank was working with the GAO and inspector general to satisfy the requirement.
Senate Democrats appear intent on preserving the bank.
In a conference call with reporters last week, Sen. Chuck Schumer, D-N.Y., said a bill extending the bank’s life likely will be introduced in the Senate next month. The legislation, he said, would pass the Senate with bipartisan support.
Melissa Quinn is a news reporter for The Daily Signal.