Lesson From Ex-Im Fight: More Agencies Should Have Sunsets

Congress hasn’t voted just yet on the Continuing Resolution that includes the Export-Import Bank’s reauthorization. But we already know that it will pass this week, and Ex-Im will get a new lease on life, probably through June. We’ll have this fight all over again next spring and summer. But the fight has already taught an important lesson: more agencies should have automatically expiring charters. Ending or reforming Ex-Im would never have been a possibility if its charter didn’t have an expiration date. I make that point in a piece in today’s Investor’s Business Daily:

 Institutions matter. The rules of the game have a lot to do with how people play it — imagine what basketball strategy would look like if the three-point shot was changed to five points, or how baseball strategy would change if hitters could strike out on a foul ball.

The rules an agency issues aren’t the only ones that matter. Rules governing the agencies themselves are just as important. If more agencies had a built-in check such as an automatic sunset that forced a periodic congressional reauthorization vote, they would have an incentive to behave better and pursue their missions in a less burdensome way.

Without an expiring charter that Congress needs to reauthorize now and then, Ex-Im would have almost no chance of being reformed or closed. Now imagine if more agencies had their own sunsets or expiring charters, such as the EPA, the FCC, the Education Department, or any number of other agencies. Not only would reformers periodically have chances to rein in agency excesses or even abolish them outright, agency executives would know this. They would have a built-in incentive to self-police that is currently almost unknown in Washington.

If you want better results, often the game needs better rules. And that’s the biggest lesson from the Ex-Im fight. Read the whole piece here.

CEI’s Battered Business Bureau: The Week in Regulation

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The number of new regulations topped 2,500 on the year, while the Federal Register added 1,853 pages to end the week just shy of the 55,000 mark.

On to the data:

  • Last week, 64 new final regulations were published in the Federal Register. There were 62 new final rules the previous week.
  • That’s the equivalent of a new regulation every two hours and 38 minutes.
  • So far in 2014, 2,521 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,561 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
  • Last week, 1,853 new pages were added to the Federal Register.
  • Currently at 54,872 pages, the 2014 Federal Register is on pace for 77,503 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 29 such rules have been published so far this year, none in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
  • 206 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 483 new rules affect small businesses; 70 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Dueling Ex-Im Commentary

A vote on the Continuing Resolution, which includes the controversial Export-Import Bank reauthorization was originally scheduled for today, but has been pushed back to next week. So the combat continues over how long the Ex-Im reauthorization will last, and what other conditions might included as part of the deal. In today’s Washington Times, National Association of Manufacturers President Jay Timmons and I have dueling op-eds, with Timmons favoring reauthorizing Ex-Im, and me wanting to end it. The Wall Street Journal also weighed in with an editorial this morning, sharing my skepticism of Ex-Im.

Timmons makes three points in his piece that deserve a response. First, he argues that Ex-Im fills in gaps in private financing:

 Ex-Im Bank provides financing that is critical to fill gaps when private-sector financing for small and large manufacturers is not available.

If Ex-Im makes a profit, as Timmons argues it does, then surely private banks would welcome an opportunity to make money for themselves by lending to more exporting businesses and their customers. If Ex-Im loses money, as the Congressional Budget Office convincingly argues, then there is no financing gap to be filled, and Ex-Im is financing too many insolvent projects.

Second, Timmons commits the “but other governments do it, too” fallacy:

 Foreign competitors are stepping up their game. In fact, China provides at least five times the assistance that Ex-Im Bank does. If the United States fails to back up its exporters, our exporters and hundreds of thousands of jobs are at risk.

This is equivalent to saying the U.S. government should stop ripping off its citizens only when foreign governments stop ripping off their own citizens. Foreign Ex-Im Banks also cause a regressive income transfer: If we import artificially cheap goods, our consumers benefit at their taxpayers’ direct expense. For China and many other countries, this is literally a cash gift from the global poor to wealthier Americans. I oppose regressive wealth transfers, and I imagine Timmons does, too. But the solution is not to counter other governments’ policy mistakes with our own mistakes. It is for China and other countries to end their Ex-Im programs. This is one area where we can lead by example.

Third, Timmons argues that Ex-Im is a small businesses program at heart:

 Thousands of companies — the majority of them small ones — use Ex-Im Bank when they have no other options in terms of lending, guarantees and insurance.

For one, the federal government already has a Small Business Administration to subsidize small businesses. And according to data from Ex-Im’s own annual report, Ex-Im actually behaves more like a Big Business Administration. More than 80 percent of its financial products, measured in dollars, go to big firms. Moreover, this proportion is in direct violation of its charter, which requires at least 20 percent of its financial products to go to small businesses (having up to 1,500 employees, which is a pretty big definition of small).

Timmons and NAM do a lot of good work, including a just-released update of Nicole and Mark Crain’s estimate of federal regulatory costs, which Wayne Crews wrote about yesterday. But they have it wrong on Ex-Im. As I point out in my piece, Ex-Im is pro-business, not pro-market. The short-term help it gives to individual businesses causes long-term harm to the competitive market process that capitalism depends on, and gives companies an incentive to compete in Washington instead of the marketplace. I gave nine other reasons to oppose Ex-Im here. That makes ten; there are more.

Don’t Tie Ex-Im Renewal to Government Shutdown

It appears Congress will decide the Export-Import Bank’s short-term fate this week. There are several bills with different reauthorization terms, and Rep. Justin Amash and Sen. Mike Lee even have a bill that would shutter the bank altogether. None of the bills have made it out of the House Financial Services Committee, which is chaired by Rep. Jeb Hensarling, who opposes the bank. What will likely happen instead is that Ex-Im reauthorization will be included in a Continuing Resolution (CR), which Congress must pass by September 30 to avoid a government shutdown.

The current battle isn’t whether Ex-Im will be reauthorized, it is how long the reauthorization will last. There are two likely options. Ex-Im opponents would prefer a reauthorization through early 2015. Ex-Im opposition is bipartisan, but the GOP has been more vocal about it, and most political observers are expecting Republicans to gain seats this November. Depending on how the numbers play out, when the new Congress convenes in January, it might be possible for Congressional Republicans to either let Ex-Im’s charter expire, or pass a bill similar to Amash and Lee’s to actively kill the bank, even if they can’t get much Democratic support.

Ex-Im’s defenders would rather keep the shutdown card in their hand; Ex-Im opponents will not risk a shutdown over a program equivalent to less than one percent of the federal budget. That’s why they want Ex-Im’s reauthorization to be the same length of any Continuing Resolution that gets passed, however long that might be. Even though that would be a shorter-term reauthorization, they can continue to renew Ex-Im with each CR that must pass going forward, knowing that it will succeed.

We’ll find out in the next few days which side wins. In the meantime, enjoy the odd spectacle of left-wing populists advocating special favors for the same big businesses they usually rail against, and the GOP’s free-market wing, popularly perceived as stooges for big business, calling for an end to corporate welfare (Salon had a bit to say on that here).

CEI’s Battered Business Bureau: The Week in Regulation

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It was a short week due to the Labor Day holiday, but agencies still managed to issue more than 60 new regulations and push the Federal Register over the 53,000-page mark.

On to the data:

  • Last week, 62 new final regulations were published in the Federal Register. There were 73 new final rules the previous week.
  • That’s the equivalent of a new regulation every two hours and 43 minutes.
  • So far in 2014, 2,457 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,571 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
  • Last week, 1,238 new pages were added to the Federal Register.
  • Currently at 53,019 pages, the 2014 Federal Register is on pace for 77,063 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 29 such rules have been published so far this year, one in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
  • 200 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 474 new rules affect small businesses; 69 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Ex-Im Update

Congress comes back from its annual August recess next week. One of the top items on its agenda is deciding the Export-Import Bank’s fate. Ex-Im subsidizes financing for U.S. exporters and their foreign customers. As I outlined here, Ex-Im subsidizes certain businesses at others’ expense. It is a pro-business policy, when what the economy needs are pro-market policies. Ex-Im will also be forced to shut its doors unless Congress reauthorizes its charter by the end of September, making for a golden reform opportunity for corporate welfare opponents.

The merits of the issue are clear enough, but politics is getting in the way. A bill to reauthorizes Ex-Im’s charter would likely pass the Senate, but would have trouble getting through the House. This would ordinarily mean that Ex-Im opponents would succeed in shuttering the agency, since Ex-Im’s expiration is automatic without reauthorization. That means Ex-Im supporters will probably pursue other means, such as tucking Ex-Im’s reauthorization into a must-pass appropriations bill. Ex-Im opponents would have no choice but to swallow that poison pill, or risk another politically costly government shutdown.

If the appropriations bill scenario is what comes to pass, reformers will likely gain some kind of concession, such as a very short reauthorization period. Ex-Im reauthorizations are typically good for four or five years; this reauthorization could last just a few months, forcing Congress to revisit Ex-Im as soon as January or February. This would remove Ex-Im as an election issue for reformers, but still leave them with a genuine chance of victory once the next Congress convenes. It would also give campaigning pro-Ex-Im incumbents a chance to tell voters they can bring home the bacon—especially in Washington State, which receives more than 40 percent of Ex-Im’s total financing, despite housing only 2 percent of the U.S. population.

There are a lot of possible fates for the Export-Import Bank. Whatever happens this month, reformers will have a good chance to end one of the federal government’s largest corporate welfare programs. Readers interested in more detail on the politics of the Ex-Im fight should read John Bresnahan and Jake Sherman’s piece in today’s Politico. For the merits of the issue, see my recent Ex-Im paper.

CEI’s Battered Business Bureau: The Week in Regulation

In a week like any other, federal agencies issued regulations for everything from dairy farmers’ profit margins to Canadian apple exports.

On to the data:

  • Last week, 73 new final regulations were published in the Federal Register. There were 83 new final rules the previous week.
  • That’s the equivalent of a new regulation every two hours and 18 minutes.
  • So far in 2014, 2,395 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,564 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
  • Last week, 1,349 new pages were added to the Federal Register.
  • Currently at 51,781 pages, the 2014 Federal Register is on pace for 77,056 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 27 such rules have been published so far this year, none of them in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
  • 197 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 460 new rules affect small businesses; 68 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.