The sleepy, little-known U.S. Export-Import Bank is having an uncomfortable moment in the spotlight. The bank, a federal agency that finances and insures foreign governments’ and corporations’ purchases of American exports, is due for congressional reauthorization this fall. For most of its history, Congress has reauthorized the Ex-Im bank without controversy. But it has become a political lightning rod amid accusations that it’s an instrument of crony capitalism — a way for well-connected domestic companies to receive federal subsidies at the expense of competitors and taxpayers. A chorus of libertarian and ultraconservative Tea Party Republicans are making reauthorization a litmus test, framing the bank as “corporate welfare” abetted by the Republican establishment. The fight over reauthorization has taken on greater urgency since House Majority Leader Eric Cantor, a key supporter of the bank, improbably lost his Republican Party primary in June in what was billed as a Tea Party-versus-establishment battle. Indeed, after his loss Boeing — a large beneficiary of Ex-Im funds — took a tumble in the stock market on fears that Ex-Im’s survival has been imperiled.
The accusation of crony capitalism is a powerful one. In the age of trillion-dollar corporate bailouts, it’s not hard to see why that accusation resonates with many U.S. voters. However, the debate over whether the bank represents “crony capitalism” illustrates a major point of confusion about what crony capitalism is, obscuring actual steps that could be taken to address the problem. The public debate about crony capitalism should focus not simply on where government and business intersect, but on when that intersection implicates the kinds of traditional corruption — such as bribery, bid-rigging, special treatment, and conflicts of interest — that distinguish crony capitalism from government’s legitimate if controversial engagement with the private sector. Without focusing on the actual corruption that gives rise to crony capitalism, those trying to fight it are aiming at the wrong target.