National Defense Authorization Act for Fiscal Year 2017

Floor Speech

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Mr. LEE. Mr. President, what my distinguished colleagues from North Dakota and Indiana are proposing is to unleash the Export-Import Bank from the constraints under which it currently must operate and to begin authorizing transactions above $10 million. Between 2007 and 2014, 84 percent of the Bank's subsidy and loan guarantee deals exceeded $10 million--84 percent--and the vast majority of those were given to the wealthiest, most well-connected businesses in America that should have no problem at all obtaining financing in the open market.

The Export-Import Bank represents so much of what the American people resent and despise about Washington, DC. This is a Great Depression era relic, one that lives on today and has grown into one of the most treasured relics for favoring banks. It is a favored relic for well- heeled lobbyists, big government, and politically favored businesses. It is an 82-year-old case study in American corporate welfare, and for some reason this Senate continues to support it.

Ex-Im has managed to live through more than 30 corruption and fraud investigations into its system of doling out taxpayer-backed subsidies and loan guarantees to foreign buyers of U.S. exports. In 2013, for half of the financing deals within the Export-Import Bank's portfolio, Ex-Im was either unable or unwilling to provide any justification whatsoever connected to its mission. That is $18.8 billion in estimated export value that apparently had no connection to Ex-Im's mission or, if it did, Ex-Im didn't bother to offer that up.

Many of Ex-Im's supporters claim the Bank's main function is to support small business. That sounds nice, but the problem with it is that this claim doesn't stand up to even a modest amount of scrutiny. Look at the institution's track record. Only one-half of 1 percent of all small businesses in America benefit from Ex-Im financing--one-half of 1 percent. And even that tiny figure may well be an overestimation, may well overstate the case, because Ex-Im uses such a broad definition of the term small business.

Confirming this nominee would allow Ex-Im to return to its old ways of approving massive financing deals for the largest corporations, in coordination with the largest banks, all with the backing of American taxpayers.

Permanently ending the Export-Import Bank would be a small but important and symbolic step toward restoring fairness to our economy and fairness to our government. It would prove to the American people that their elected representatives in Congress have the courage to eliminate one of the many Federal programs that foster cozy relationships between political and economic insiders, providing a breeding ground for cronyism and for corruption. So long as this Senate remains unwilling to close Ex-Im, we should, at the very least, make sure it does not have the ability to further advance its cronyist agenda.

If you want to talk about harming competitiveness, let's talk about that. If we want to have that discussion, let's have that discussion now. If you want to know what harms competitiveness in America, including and especially the kind of competitiveness that has tended to foster the development of the greatest economy the world has ever known--the kind of competitiveness that makes it possible, where it exists, for small businesses to make it onto the big stage--let's look at Federal regulations.

Federal regulations are a big deal in this country. I remember being appalled 20 years ago to learn the Federal regulatory system was imposing some $300 billion a year in corporate compliance costs-- regulatory compliance costs. Those regulatory compliance costs might be borne immediately and initially by big corporations, by small corporations, mostly by businesses, but you know who pays for it? Hard- working Americans. In fact, some have described this effect as sort of a backdoor, invisible, and very regressive tax on the American people.

So when I first learned of this problem, I started thinking of it this way. This is an additional $300 billion a year the American people are essentially paying into the Federal Government because everything they buy--goods and services--becomes more expensive. They also pay for it in terms of diminished wages, unemployment, and underemployment, but they do pay for it. And they pay for it disproportionately at the middle and at the low end of the economic spectrum in America.

Unlike our actual tax system--our visible tax system--which is highly progressive, our backdoor invisible tax system--our regulatory system-- is highly regressive. Some have estimated this regulatory compliance cost--just complying with Federal regulations--today costs the economy some $2 trillion a year, meaning this has multiplied roughly sevenfold just in the last 20 years.

If you don't think that is a significant impediment to competitiveness in America, I don't know what is. This is a problem. And some have estimated that each and every American household pays some $15,000 more each year for goods purchased simply because of Federal regulations. This hurts competitiveness. So do our high tax rates; these harm competitiveness.

So I stand with the senior Senator from Alabama and I support him in his objection.

I thank the Chair.

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Mr. LEE. Yes.

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Mr. LEE. Mr. President, as my colleague is asking the question, I assume she has the answer.

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Mr. LEE. And I am sure she is prepared to tell us that.

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Mr. LEE. I am grateful to respond to both points made by my distinguished colleague, the Senator from North Dakota.

In the first place, as to the need to have a full-throated debate, I welcome that. That is exactly what we need. It is what I have been wanting to have for a long time. But last year, instead of having a full-throated debate specifically about Ex-Im, we saw Ex-Im attached to a much larger package--a much larger package that a lot of people were determined to support, regardless of what else was in there. So a lot of people voted for that package, regardless of how they might feel about the Export-Import Bank. But as for a full-throated debate, yes, that is exactly what we need. We would get that if we could actually debate the reauthorization of Export-Import on its own merits, as we should have done last year. We were deprived of that opportunity, so now we are using every opportunity we can to have a real full-throated debate. That is why we are doing this. That is exactly the reason we need to do that.

As to the figure the Senator cited with respect to the percentage of loans going to small business, sure, if one wants to talk about the number of actual loans made, one can make that number look pretty good. But look at the number that I think is more significant: Only one-half of 1 percent of all small businesses in America actually benefit from Ex-Im financing. That is a pretty significant deal when one looks at how much of the lending authority in the total dollar amount the Export-Import Bank supplies to larger businesses and to businesses, regardless of their size, that could in fact obtain financing in the open market.

Again, we are not back in the Great Depression anymore. This is a Great Depression era relic. So regardless of what my colleague may think about the Great Depression era dynamics at play that caused those serving in this body and the House of Representatives in the 1930s to put this program in place, we have other challenges today. And many of those challenges are created by the government itself--by the government being too big a presence within our marketplace, inuring ultimately to the benefit of big business and harming everyone else.

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