For those who missed last nights Democrat debate, there was a very substantive back-and-forth between Bernie Sanders and Hillary Clinton regarding the Trans-Pacific Trade Partnership deal (TPP).
Bernie Sanders has been a long-time opponent to TPP, and Hillary Clinton only recently opposing it. Some would say: predictably due to the poll-tested opposition amid the party.
As Bernie pointed out Hillary’s ‘come-to-Jesus-moment’ on the issue, he also brought a secondary and semi-related subject into the foray by discussing the Import/Export bank authorization (part of the Omnibus financial deal).
Sanders voted (in the minority position) against the Import/Export bank reauthorization as a matter of principle. Readers will note that Senator Ted Cruz, and a majority of ‘conservatives’ also don’t like the crony capitalism within the I/E bank.
Ted Cruz’s opposition to the I/E reauthorization was/is so strong, it was the basis for him claiming a complete reversal of advocacy for the TPP deal.
Senator Mitch McConnell purchased the votes for the TPP deal (in June) by promising several Democrats he would reauthorize the I/E bank funding in the Omnibus (December) spending bill. This McConnell quid-pro-quo arrangement was “The Lie” that Ted Cruz pointed out on the Senate floor.
Just to be clear, Senator Ted Cruz was for TPP (his own bill) until McConnell added I/E reauthorization promises; at which time Cruz was no longer in favor of TPP.
Senator Ted Cruz supported TPP, but opposed funding the Import Export bank.
During last night’s debate, moderator Anderson Cooper pointed out Bernie Sanders opposition to the I/E was equivalent to the same position as Ted Cruz. This prompted Sanders to say the Republicans are not always wrong, and Democrats are not always right.
(Please watch 48 second video)
Here’s where last night’s Democrat debate highlights the corruption from Wall Street.
In theory the purpose of the Import Export bank is solid. Various countries we compete against on trade and manufacturing receive subsidies from their government(s).
Examples: The Vietnamese government may not charge a manufacturer for their energy use; or the Chinese Government may actually build a manufacturing plant for a corporation to use; or a combination of both – or other similar subsidies. The Mexican government does much the same as China or Vietnam.
This puts U.S. manufacturers at a disadvantage on the cost of their operations. Under capitalistic markets the U.S. company is putting out all the money to build their own manufacturing infrastructure or plant.
In the U.S. the manufacturing company also has to factor in the cost of energy, transportation and other similar costs to get a product to market, which in foreign nations may actually be paid for (subsidized) by a governmental planning authority.
The purpose of the I/E bank was to offset this disadvantage. A central banking authority specifically intended to help defer U.S. industry capital costs with long-term very low interest loans allowing the manufacturer to compete against foreign government subsidy. In theory this was the reasoning behind the I/E Bank process.
However, the system -as currently structured- is fraught with corruption and crony-capitalism. Large corporations contribute to political entities (officials) for favorable terms on loans, and/or legislation specific to their enterprise, which may or may not ever be paid back.
Hence, the “conservative” argument has become the I/E is funding profitable corporations with taxpayer monies. The extraordinary profits which result as an outcome of these terms are then paid back to the politicians (via campaign contributions) to keep the entire scheme in operation.
Subsequently, the Ted Cruz and popular “conservative” position has evolved to defunding the I/E bank completely, because the crony-capitalism is nothing more than lining the pockets of Wall Street corporate entities and the politicians who facilitate it.
This part is key – Wall Street ultimately benefits from I/E transactions via the company profit statement and more favorable profit driven stock evaluation.
Bernie Sanders, who opposes the I/E for the same reason, wants to see the I/E bank modified back to the original intent of loans to small manufacturers (currently less than 20% of I/E beneficiaries), and uses his vote to try and leverage the original intent. Sanders opposes the “corruption” inside the process, not the I/E bank itself. Actually a solid blue-collar, pro-U.S. jobs position.
Here’s where it gets interesting. The TPP deal is terrible for U.S. manufacturing jobs because it puts the U.S. company at a strong disadvantage to all of the above nations who benefit from low costs of good sold. Labor, energy, little environmental regulation, and government subsidy all benefit the Pacific Rim manufacturers. In addition, the central planning of the government, via currency manipulation (devaluation), keeps the exported prices of their goods artificially low.
Corporations in these type of manufacturing nations simply have a ridiculously low inherent cost in the manufactured product. It’s just cheaper to make it there, and ship it here, than to be manufactured here and sold in the U.S. This is the essential problem.
When Ted Cruz supported TPP he supported this overall system.
However, remember he reversed his support based on the I/E reauthorization; and ONLY because of the I/E reauthorization.
If the I/E was not authorized, he would have presumably still supported TPP. Heck, he even created “Fast Track” (Trade Promotion Authority ‘TPA’) to facilitate the passage of TPP.
But Cruz did change his mind, according to him because of the I/E bank (McConnell Lie). If McConnell never reauthorized the I/E bank, Cruz would have continued supporting the TPP.
This position of Presidential Candidate Ted Cruz is very important to digest because at first the two issues might seem disconnected, yet they are not.
Here’s also what Ted Cruz supporters don’t seem to grasp, because apparently he’s really good at obfuscating the logic. If TPP passes, and the I/E had not been reauthorized, WHICH WAS/IS THE POSITION OF SENATOR CRUZ, think about what that actually means in real terms.
TPP gives the pacific rim manufacturing companies significant, almost unlimited, access to the U.S. market. While simultaneously, the I/E bank defunding impedes U.S. manufacturers from cost-offsets in their own business models. That’s a direct double smash in the face of the U.S. manufacturing industry, and U.S. worker. Two devastating simultaneous blows that are unrecoverable.
So again, think about this carefully as you engage understanding. Senator Ted Cruz’s position was to assist foreign manufacturers to gain access to our markets, and simultaneously hand-cuff any new capital investment in our own manufacturing base.
Ask yourself who does this help?
This approach directly helps financial entities who are invested overseas.
Who are those entities?
Make sense now?