The Export-Import Bank and the Lack of a Trade Policy

As expected, Congress passed a continuing resolution (CR) last week that will fund the government through December 11.  This had to be done in the absence of legislation to fund fully the government in FY 2015, which begins on October 1.  The December 11 expiration date means the funding issue will have to be revisited once more during the lame duck session, most likely with another continuing resolution that will keep the government open through early 2015.

The new CR also extends the operating authority of the Export-Import Bank through June 30 of next year. While not a full-fledged reauthorization of the Bank, the extension keeps the institution alive for now in the face of conservative objections that it represents little more than “crony capitalism” that uses taxpayer dollars to support the international sales of big companies through sweetheart financing guarantees.

Keeping the Export-Import Bank on life support underscores first, the inability of Washington to kill off agencies and, second, the terrible preference that Congress has shown in the last twenty years for temporary “fixes” that merely prolong debates rather than settle them.

Indeed the entire collapse of the budget process, which necessitates passage of continuing resolutions, is itself an illustration of the latter problem.  Or think about so-called tax extenders, measures such as the tax credit for research and development, which are renewed on a regular basis rather than permanently placed in the tax code.  There are 55 such provisions and they have been temporarily extended 19 times.  Why?

Government’s preference for the temporary over the permanent of course can be explained in a number of ways.  But surely one explanation is the lack of an economic strategy that allows policymakers to evaluate the worth of proposals or agencies in the context of a larger set of national goals. 

The Export-Import Bank is an example.  Whatever one thinks of it, it appears to be a “one-off” agency without any grounding in an overall trade policy because we do not have an overall trade policy that enjoys bipartisan support.  Lacking a trade policy, we cannot measure the utility of the Export-Import Bank as part of that policy.  And so the Bank is consigned to a kind of twilight existence, not quite dead and not quite alive, hostage to future fights over its temporary extension, battles that will benefit no one but the lobbyists who are paid to wage them.


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