This article was published by The McAlvany Intelligence Advisor on Monday, April 17, 2017:
Many were surprised when President Trump named the EPA’s fiercest enemy – Oklahoma Attorney General Scott Pruitt – to head up the agency. For years Pruitt has raged against the agency for overstepping its bounds and writing rules, mandates, and regulations that negatively impacted the fossil fuel industry. He sued the agency more than a dozen times in the last eight years.
What was Trump thinking?
What is now clear is that Pruitt has little interest in dismantling the EPA but instead is intending to return the agency to its central mission of protecting the quality of the nation’s air and water while respecting the role of the states as the primary enforcers of environmental laws. During his confirmation hearings, Pruitt said, “It is our state regulators who oftentimes best understand the local needs and the uniqueness of our environmental challenges.” That was enough to get the Senate to confirm him as head of the EPA.
His confirmation was good news to Jeff Holmstead, who headed up the EPA’s air and radiation office under President George Bush:
Over the past eight years in particular, [the EPA] has completely micromanaged the states. I think [with Pruitt in charge] you’ll see a real effort to reset that balance. I think he really does believe in the rule of law. He believes the role of the executive branch is to carry out the intent of Congress.
On Friday, President Trump announced his intention to nominate an anti-Export-Import Bank executive to run the place, Scott Garrett. Garrett served seven terms as a Republican member of the House from New Jersey who made no bones about his opposition to the bank. On October 27, 2015 he called it “taxpayer-funded welfare” for big companies, tweeting “I opposed the House’s vote to reauthorize the corporate welfare program known as the Ex-Im Bank. Crony Capitalism.”
Trump also announced his intention to nominate another former House member to the Ex-Im board, Spencer Bachus, who favors the bank.
If confirmed by the Senate, these two would not only give the bank its full roster of directors, but it would in effect completely revive the bank from its near-death experience in 2015 when the House voted not to renew its charter. Some machinations later on that year gave it some life support, and if Trump’s nominees are confirmed, it’ll be back to business as usual.
Ironically, the Ex-Im Bank got the same start as did the EPA: from executive orders that were later allowed to become executive branch agencies. The Ex-Im bank was created by then-President Franklin Roosevelt in 1934 and then advanced to full executive agency status in 1945. Since that time, it has guaranteed an estimated $500 billion in loans to “facilitate” American companies’ ability to sell their wares overseas to high-credit-risk customers.
It was initially sold to the American people as a tool to expand small businesses seeking to grow overseas but lacking the capital to do so, or unwilling to take on the risk, or unable to find private banks to guarantee payment in the event of an overseas customer’s default. Since then it has morphed into a funnel of corporate welfare to the largest US companies, like Boeing, General Electric, Caterpillar, Bechtel, Exxon Mobil, Applied Materials, and Westinghouse. In fact, between 2007 and 2013 the Ex-Im Bank subsidized some $100 billion in sales for these companies, with Boeing getting the lion’s share at $66.7 billion.
The benefit to Boeing and the others is a savings in the hundreds of millions of dollars in interest costs, plus putting any default risk on the backs of American taxpayers. That keeps their balance sheets clean while improving their bottom lines.
Presidential candidate Barack Obama saw what it has become. He said “I am not a Democrat who believes that we can or should defend every government program just because it’s there. There are some that don’t work like we had hoped, like … the Export-Import Bank that has become little more than a fund for corporate welfare.”
Once in office, however, the new reality set in, with Obama finding it “expedient” to change his mind as his relationship with Jeffrey Immelt, head of General Electric, solidified. Obama named Immelt to his Economic Recovery Advisory Board. In a flip-flop, Obama said:
Past Congresses have done this [renewed the Ex-Im bank’s charter] 16 times, always with support from both parties. Republican and Democrat presidents have supported the bank, too. This time around shouldn’t be any different. Because the bank works. It’s independent. It pays for itself.
This sounds awfully familiar. Last Tuesday, President Trump reversed himself on the Ex-Im Bank. During his presidential campaign, Trump got mileage out of claiming that the Ex-Im Bank was “featherbedding” for politicians and huge corporations.
And then he met Boeing’s CEO, Dennis Mullenburg. At issue was the cost of the new Air Force One aircraft Boeing was building. Said Trump in December, “We’re going to get it done for less than [the $4 billion price tag], and we’re committed to working together to make sure that happens.”
That relationship blossomed, and, according to Bloomberg, “Boeing Co. Chief Executive Dennis Mullenburg is said to have helped change the president’s view of the [bank]. Boeing is by far the largest beneficiary of the [Ex-Im] bank among exporters, to the tune of several billion dollars annually, followed by General Electric Co.”
The reversal by Trump was eerily similar to that pulled by Obama:
Instinctively, you would say, “Isn’t [providing taxpayer-guaranteed funding for corporations who could do it on their own] a ridiculous thing? But actually [after having those conversations with Mullenburg], it’s a very good thing.
Any claim that the US government needs to provide taxpayer guaranteed loans to big companies like Boeing and GE because 60 other governments do so is facetious on its face. If 60 other governments declared that putting rat poison into drinking water was a good idea, should the US government do so, too?
The real reason that the Ex-Im Bank should be left to die, and not be resurrected by the president, is because there is no Constitutional authority for such a program in the first place.
But House Minority Whip Steny Hoyer (D-Md.) thinks he sees what Trump is up to: “If former Representative Garrett is confirmed to lead the bank, it would be the ultimate act of sabotage.” Accordingly he is urging fellow Democrats in the Senate to vote against Garrett’s nomination.
Perhaps all Trump wants to do is have Garrett stuff the genie back into the bottle (just like Pruitt) and just guarantee small loans to small companies. But there’s a problem with that. The Ex-Im bank guaranteed millions in loans for Solyndra, the small solar cell company that went bankrupt in 2011. And it guaranteed more millions in loans for a small energy company called Enron, which descended into bankruptcy in 2001.
Sources:
Washington Post: Scott Pruitt, longtime adversary of EPA, confirmed to lead the agency
The White House: President Donald J. Trump Announces Intent to Nominate Personnel to Key Administration Posts
Bloomberg: Trump Pick for Export-Import Bank Is Critical of Its Mission
Atlanta Journal: Trump keeps Export-Import Bank, but chooses fierce critic to run it
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