The crony capitalism machine: the Export-Import Bank is inefficient and immoral.

• Author: de Kugy, Veronique
• Position: Columns

Congress will soon debate the fate of the U.S. Export-Import Bank, an outfit that doles out money to favored corporations and foreign governments. For 80 years, the bank and the crony capitalists it supports have defeated every attempt to shut it down.

But that may slowly be changing. In recent months a few Republican lawmakers--including Reps. Jeb Hensarling of Texas, Tom McClintock of California, Scott Garrett of New Jersey, Mick Mulvaney of South Carolina, and Justin Amash of Michigan, along with Sens. Mike Lee of Utah and Ted Cruz of Texas--have been working to put an end to the boondoggle.

Back in the 1980s, then-Budget Director David Stockman tried but ultimately failed to abolish the Ex-Im Bank. He did manage to cut the institution's lending budget from $7 billion in 1981 to $3.2 billion in 1986, but that victory was short-lived: By 1989, lending had grown back to $12.5 billion, and taxpayer exposure rose to roughly $58 billion.

Since then it's gotten worse. Last year, the Ex-Im Bank authorized $27.3 billion worth of direct loans, loan guarantees, and capital and credit insurance. The transactions are seen as low-risk since they are backed by the "full faith and credit" of the federal government. This has encouraged Democrats and Republicans alike to rack up $134 billion in outstanding liabilities, any of which will be covered by taxpayers if something goes wrong.

The program's advocates argue that foreign enterprises wouldn't otherwise be able to access sufficient credit to purchase new exports from American companies. Helping the foreign customers of U.S. exporters, they say, therefore boosts American companies and creates thousands of jobs.

But those claims don't withstand scrutiny. Although some of the loans have gone to companies that could not have gotten financing without the Ex-Im Bank, a significant amount of Ex-Im lending goes to corporations that wouldn't have any problem accessing credit, such as Indonesia's largest privately run airline, Lion Air.

Even worse, Ex-Im meddling too often encourages poor countries to take on debt they can ill-afford.

in many ways, the Export-Import Bank is repeating the tragic mistakes of the early 21st century housing bubble on an international scale. Since 1996, the International Monetary Fund and World Bank have maintained a list of Heavily Indebted Poor Countries (HIPCs), which face debt burdens their governments cannot sustainably manage. Since fiscal year 2007, the Export-Import Bank...