Larry Summers on Sunday came out in support of the Export-Import Bank, the bank whose future is stirring a heated debate in Congress.
In an op-ed in The Financial Times, Summers argued the bank provides U.S. exporters the support to compete with other nations’ exporters, all of whom have similar support vehicles in their nations. He said the failure to renew the Ex-Im Bank’s charter without other nations dismantling their vehicles would be the economic equivalent of “unilateral disarmament.”
At a time when authoritarian mercantilism has emerged as the principal alternative to democratic capitalism, the US Congress is flirting with eliminating the Export Import Bank that, at no cost to the government, enables US exporters to compete on a more level playing field with those of competitor nations, all of whom have similar vehicles. Only by maintaining a capacity to counter foreign subsidies can we hope to maintain a level global trading system and to avoid ceding ground to mercantilists. Eliminating the Export Import Bank without extracting any concessions from foreign governments would be the economic equivalent of unilateral disarmament.
House conservatives have seized momentum on the issue after House Majority Leader Eric Cantor’s stunning loss in his Republican primary. Cantor was a supporter of the bank who brokered a deal in 2012 to renew its charter.
The bank’s supporters, like the White House and Republican establishment-friendly Chamber of Commerce, view it as a critical tool of support for American businesses large and small abroad. Its opponents view it as a prime example of “crony capitalism” and the government waste conservatives have vowed to get rid of in Washington.
Broadly, Summers’ op-ed called on the U.S. to get engaged in issues of global economic consequences. In addition to highlighting his support for the Ex-Im Bank, he slammed congressional Republicans for blocking passage of reforms to the International Monetary Fund and dinged Congress for seemingly not finding the urgency to work toward a Trans-Pacific Partnership trade deal.
“A failure to engage effectively with global economic issues is a failure to mount a strong forward defence of American interests,” Summers wrote. “The fact that we cannot do everything must not become a reason not to do anything.”
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.