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Export-Import Bank Reauthorization Act of 2006

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Date:
Location: Washington, DC


EXPORT-IMPORT BANK REAUTHORIZATION ACT OF 2006

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Mr. PAUL. Mr. Speaker, I thank the gentlewoman for yielding me time.

Mr. Speaker, Congress should reject H.R. 5068, the Export-Import Reauthorization Act, for economic, constitutional, and moral reasons. The Export-Import Bank takes money from American taxpayers to subsidize exports by American companies. Of course it is not just any company that receives Ex-Im support.

The vast majority of Ex-Im Bank funds benefit Enron-like outfits that must rely on political connections and government subsidies to survive and/or multinational corporations who can afford to support their own efforts without relying on the American taxpayers.

In fact, according to journalist Robert Novak, Enron itself received over $640 million in taxpayer-funded assistance from Ex-Im. The taxpayer-provided largess no doubt helped postpone Enron's inevitable day of reckoning. It is not only bad economics to force working American small businesses and entrepreneurs to subsidize the exports of large corporations; it is also immoral.

Redistribution from the poor and middle class to the wealthy is the most indefensible aspect of the welfare state, yet it is the most accepted form of welfare.

Mr. Speaker, it never ceases to amaze me how Members who criticize welfare for the poor on moral and constitutional grounds see no problem with the even more objectionable programs that provide welfare for the rich.

The moral case against Ex-Im is strengthened when one considers that one of the governments which benefits most from Ex-Im funds is Communist China. In fact, Ex-Im actually underwrites joint ventures with firms owned by the Chinese Government. Whatever one's position is on trading with China, I would hope all of us would agree that it is wrong to force taxpayers to subsidize in any way this regime.

Unfortunately, China is not an isolated case. Colombia and Sudan benefit from taxpayer subsidized trade as well, courtesy of the Ex-Im Bank. At a time when the Federal Government is running huge deficits and Congress is once again preparing to raid Social Security and Medicare trust funds, does it really make sense to use taxpayers' funds to benefit future Enrons, Fortune 500 companies, and Communist China?

One project funded by Ex-Im in China is an $18 million loan guarantee to expand steel manufacturing. This is not an isolated example of how Ex-Im helps foreign steel producers. According to the most recent figures available, the five countries with the greatest Ex-Im exposure are all among the top 10 exporters of steel and of steel-to-products to the United States.

In fact, Ex-Im provides almost $20 billion of U.S. taxpayer support to these countries. Mr. Speaker, I find it hard to see how taxing American steel producers to benefit their foreign competitors strengthens the American economy.

Proponents of continued American support for the Ex-Im Bank claim that the bank creates jobs and promotes economic growth. However, this is a fallacy worth looking in to.

However, this claim rests on a version of what the great economist Henry Hazlitt called the ``broken window'' fallacy. When a hoodlum throws a rock through a store window, it can be said he has contributed to the economy, as the storeowner will have to spend money having the window fixed. The benefits to those who repaired the window are visible for all to see, therefore it is easy to see the broken window as economically beneficial. However, the ``benefits'' of the broken window are revealed as an illusion when one takes into account what is not seen: the businesses and workers who would have benefited had the store owner not spent money repairing a window, but rather had been free to spend his money as he chose.

Similarly, the beneficiaries of Eximbank are visible to all. What is not seen is the products that would have been built, the businesses that would have been started, and the jobs that would have been created had the funds used for the Eximbank been left in the hands of consumers. Leaving the resources in the private sector ensures the resources will be put to the use most highly valued by individual consumers. In contrast, when the government diverts resources into the public sector via programs such as the Eximbank, their use is determined by bureaucrats and politically powerful special interests, resulting in a distorted market and a misallocation of resources. By distorting the market and preventing resources from achieving their highest valued use, Eximbank actually costs Americans jobs and reduces America's standard of living!

Some supporters of this bill equate supporting Eximbank with supporting ``free trade,'' and claim that opponents are ``protectionists'' and ``isolationists.'' Mr. Speaker, this is nonsense, Eximbank has nothing to do with free trade. True free trade involves the peaceful, voluntary exchange of goods across borders, not forcing taxpayers to subsidize the exports of politically powerful companies. Eximbank is not free trade, but rather managed trade, where winners and losers are determined by how well they please government bureaucrats instead of how well they please consumers.

Finally, Mr. Speaker, I would like to remind my colleagues that there is simply no constitutional justification for the expenditure of funds on programs such as Eximbank. In fact, the drafters of the Constitution would be horrified to think the Federal Government was taking hard-earned money from the American people in order to benefit the politically powerful.

In conclusion, Mr. Speaker, Eximbank distorts the market by allowing government bureaucrats to make economic decisions in place of individual consumers. Eximbank also violates basic principles of morality, by forcing working Americans to subsidize the trade of wealthy companies that could easily afford to subsidize their own trade, as well as subsidizing brutal governments like Red China and the Sudan. Eximbank also violates the limitations on congressional power to take the property of individual citizens and use it to benefit powerful special interests. It is for these reasons that I urge my colleagues to reject H.R. 5068, the Export-Import Bank Reauthorization Act.

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