1. CHAPTER OVERVIEW

Title: Export-Import Bank (TL;DR Version)

Authors: Jennifer Hazelton (The Case for the Export-Import Bank) and Veronique de Rugy (The Case for Free Trade)

Chapter 23 of “Project 2025: Mandate for Leadership” presents two contrasting viewpoints on the Export-Import Bank (EXIM), a federal agency that provides financing to support U.S. exports. Jennifer Hazelton, a former senior official in the Trump administration, argues for maintaining and strengthening EXIM, claiming it is a vital tool for promoting American businesses, countering China’s economic aggression, and supporting American jobs. Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, argues for abolishing EXIM, claiming it is a form of corporate welfare that distorts markets, harms small businesses, and wastes taxpayer money.

The chapter’s significance lies in its presentation of a key debate within the conservative movement: the role of government in supporting U.S. businesses and trade. While traditionally associated with free markets and limited government, some conservatives, like Hazelton, support EXIM as a strategic tool for promoting American interests in a global economy increasingly dominated by China. Other conservatives, like de Rugy, adhere to a more purist free-market ideology, viewing EXIM as government interference that distorts markets and benefits a select few at the expense of taxpayers and small businesses. This debate highlights the tensions within the Republican Party on economic policy and the potential for different approaches to trade and industrial policy under a future conservative administration.

2. KEY THEMES & FRAMEWORKS

Hazelton’s Argument (The Case for the Export-Import Bank):

  • Countering China: Hazelton argues that EXIM is a “strategic weapon” in the economic competition with China, particularly in the area of export credit financing. She claims that China’s aggressive use of export subsidies is giving its companies an unfair advantage and that the U.S. needs EXIM to level the playing field.
  • Supporting American Jobs and Businesses: Hazelton contends that EXIM supports American jobs and businesses by financing exports that would not otherwise occur, benefiting both large and small businesses and contributing to economic growth.
  • Protecting Taxpayers: Hazelton asserts that EXIM is a good deal for taxpayers because it operates at a profit, returning more money to the Treasury than it receives in appropriations.

De Rugy’s Argument (The Case for Free Trade):

  • Corporate Welfare: De Rugy argues that EXIM is a form of corporate welfare that benefits a small number of large corporations at the expense of taxpayers and small businesses. She claims that EXIM distorts markets by providing subsidies to companies that could obtain financing from private lenders.
  • Harming Small Businesses: De Rugy contends that EXIM actually harms small businesses by subsidizing their larger competitors, making it more difficult for them to compete in the global market.
  • Wasting Taxpayer Money: De Rugy argues that EXIM wastes taxpayer money by financing exports that would have occurred anyway and by taking on unnecessary risks that could lead to future defaults, leaving taxpayers on the hook for billions of dollars in losses.

3. DETAILED BREAKDOWN

3.1 The Case for the Export-Import Bank (746)

  • Introduction: Hazelton begins by arguing that EXIM is a “vital tool” for promoting U.S. exports and supporting American jobs.
  • Countering China: She emphasizes the importance of EXIM in countering China’s “aggressive export financing practices,” which she claims are giving Chinese companies an unfair advantage in global markets.
  • Supporting American Businesses: Hazelton argues that EXIM helps American businesses of all sizes to compete in the global marketplace, particularly in sectors where foreign competition is intense.
  • Protecting Taxpayers: She asserts that EXIM is a “good investment” for taxpayers because it operates at a profit and generates revenue for the Treasury.
  • Conclusion: Hazelton concludes by calling for the reauthorization and strengthening of EXIM, arguing that it is essential for American economic competitiveness and national security.

3.2 The Case for Free Trade (752)

  • Introduction: De Rugy begins by arguing that EXIM is “unnecessary” and “harmful” and that it should be abolished.
  • Corporate Welfare: She criticizes EXIM as a form of corporate welfare that benefits a small number of large corporations at the expense of taxpayers and small businesses.
  • Market Distortion: De Rugy argues that EXIM distorts markets by providing subsidies to companies that could obtain financing from private lenders, leading to a misallocation of resources and higher costs for consumers.
  • Harming Small Businesses: She contends that EXIM actually harms small businesses by subsidizing their larger competitors, making it more difficult for them to compete.
  • Conclusion: De Rugy concludes by arguing that abolishing EXIM would promote free trade, reduce government spending, and benefit American consumers and taxpayers.

4. POLICY RECOMMENDATIONS

Hazelton:

  • Reauthorize and Strengthen EXIM: Reauthorize EXIM and increase its lending capacity to better compete with China’s export financing programs. (751)
  • Focus on Countering China: Prioritize EXIM financing for projects that compete directly with Chinese companies, particularly in strategic sectors like infrastructure and technology. (749)
  • Support Small Businesses: Increase EXIM’s support for small businesses that are seeking to export their products and services. (750)

De Rugy:

  • Abolish EXIM: Abolish EXIM, arguing that it is unnecessary, harmful, and a form of corporate welfare. (752)
  • Promote Free Trade: Reduce trade barriers and promote free trade, allowing American businesses to compete on a level playing field without government subsidies. (759)

5. STRATEGIC OBJECTIVES

Hazelton:

  • Counter China’s Economic Influence: Use EXIM as a tool to counter China’s growing economic influence and to protect American businesses from unfair competition.
  • Promote American Exports and Jobs: Support American businesses and create jobs by financing exports that would not otherwise occur.
  • Maintain U.S. Economic Competitiveness: Ensure that American companies can compete effectively in the global marketplace, particularly in sectors where foreign competition is intense.

De Rugy:

  • Reduce Government Intervention: Minimize the role of government in the economy and allow the free market to determine winners and losers.
  • Promote Free Trade: Create a more open and competitive global trading system by reducing trade barriers and eliminating government subsidies.
  • Protect Taxpayers: Prevent the waste of taxpayer money on corporate welfare programs like EXIM.

6. CROSS-REFERENCES

  • Agenda 47: Hazelton’s argument for using EXIM to counter China aligns with the broader goals outlined in Trump’s Agenda 47, which emphasizes economic nationalism and confronting China. De Rugy’s argument for abolishing EXIM aligns with the traditional conservative emphasis on free markets and limited government.
  • Project 2025, Chapter 4: This chapter, focusing on the Department of Defense, complements Hazelton’s argument by highlighting the national security implications of economic competition with China, suggesting that EXIM could be a tool for advancing U.S. strategic interests.
  • Project 2025, Chapter 21: This chapter, focusing on the Department of Commerce, supports Hazelton’s argument by calling for a more active role for the department in promoting American businesses and countering unfair trade practices from China.

7. POTENTIAL IMPACTS

  • Impact on U.S. Exports and Jobs: Maintaining or strengthening EXIM could lead to an increase in U.S. exports and support American jobs, particularly in manufacturing and other export-oriented sectors. However, abolishing EXIM could lead to a decrease in exports and job losses, as some businesses may struggle to compete without government support.
  • Impact on the Federal Budget: EXIM currently operates at a profit, generating revenue for the Treasury. However, its critics argue that this accounting is misleading and that EXIM could expose taxpayers to significant losses in the future if borrowers default on their loans.
  • Impact on Competition and Innovation: EXIM’s supporters argue that it helps to level the playing field for American businesses competing against foreign companies that receive government subsidies. However, its critics argue that EXIM distorts markets and stifles innovation by propping up inefficient companies.
  • Impact on U.S.-China Relations: Using EXIM as a tool to counter China’s economic influence could further escalate tensions between the two countries and could lead to a trade war.

8. CRITICISMS & COUNTERARGUMENTS

Hazelton:

  • Corporate Welfare: Critics argue that EXIM is a form of corporate welfare that benefits a small number of large corporations at the expense of taxpayers and small businesses.
  • Market Distortion: Opponents argue that EXIM distorts markets by providing subsidies to companies that could obtain financing from private lenders.
  • Risk of Default: Critics argue that EXIM takes on unnecessary risks that could lead to taxpayer losses if borrowers default on their loans.

De Rugy:

  • National Security: Critics argue that abolishing EXIM would weaken the U.S.’s ability to compete with China in strategic sectors and could harm national security.
  • Supporting American Jobs: Opponents argue that abolishing EXIM would lead to job losses in export-oriented industries.
  • Leveling the Playing Field: Critics argue that EXIM is necessary to level the playing field for American businesses competing against foreign companies that receive government subsidies.

9. KEY QUOTES

Hazelton:

  • “Export credit is a strategic weapon in China’s whole-of-government approach to enhance its global power.” (748) This quote highlights Hazelton’s view of EXIM as a tool for countering China.
  • “EXIM helps American businesses of all sizes to compete in the global marketplace.” (750) This quote emphasizes Hazelton’s belief that EXIM benefits both large and small businesses.
  • “EXIM is a good investment for taxpayers because it operates at a profit and generates revenue for the Treasury.” (751) This quote reflects Hazelton’s argument that EXIM is fiscally responsible.

De Rugy:

  • “EXIM operates in effect as a protectionist agency that picks winners and losers in the market by providing political privileges to firms that are already well-financed.” (753) This quote reflects De Rugy’s view of EXIM as a form of corporate welfare that distorts markets.
  • “EXIM actually harms small businesses by subsidizing their larger competitors.” (755) This quote highlights De Rugy’s concern that EXIM disadvantages small businesses.
  • “Abolishing EXIM would promote free trade, reduce government spending, and benefit American consumers and taxpayers.” (759) This quote summarizes De Rugy’s argument for abolishing EXIM.

10. SUMMARY & SIGNIFICANCE

Chapter 23 of “Project 2025: Mandate for Leadership” presents two contrasting views on EXIM, highlighting the ongoing debate about the role of government in supporting U.S. exports and the potential for corporate welfare. While Hazelton’s argument for maintaining and strengthening EXIM reflects a more interventionist approach, de Rugy’s argument for abolishing EXIM reflects a more market-oriented approach. Democrats are likely to be more sympathetic to de Rugy’s concerns about corporate welfare, the negative impact on small businesses, and the potential for wasting taxpayer money. However, the chapter also highlights the strategic considerations related to countering China’s economic influence, which could resonate with some Democrats concerned about China’s growing global power.

This chapter, unlike some of the previous chapters, does not present a clear consensus within the conservative movement. The opposing viewpoints on EXIM reflect the broader debate within the Republican Party about the role of government in the economy and the appropriate balance between free markets and government intervention. Democrats are likely to find de Rugy’s arguments more persuasive and may see this chapter as an opportunity to build bipartisan support for reforming or eliminating EXIM. However, they may also be concerned about the potential for a future conservative administration to adopt a more protectionist approach, as advocated by Hazelton, in the name of countering China.