For nearly 90 years, the Export-Import Bank of the United States has subsidized foreign purchases of goods produced by politically connected American businesses. Now it will start loaning money to U.S. companies that do little or no business overseas.

In April, the Ex-Im Bank's board of directors voted unanimously to launch a new "Make More in America" initiative aimed at subsidizing American manufacturers instead of their foreign customers. Rather than unwinding and abolishing the Ex-Im Bank, as some fiscal conservatives have been trying to do for years, this new program is likely to further entrench the bank's role in federal industrial policy.

"This is worse than mission creep," says Sen. Pat Toomey (R–Pa.), the top Republican on the Senate Banking Committee and a longtime skeptic of the Ex-Im Bank. "There is no reason that taxpayers should have to back domestic financing when we live in a highly developed market economy in which promising businesses have access to capital on competitive terms."

Toomey submitted a series of questions to Ex-Im Bank President Reta Jo Lewis about the new program. The answers he received are telling.

In response to Toomey's request for evidence that a new domestic loan program is needed, Lewis wrote that "it is difficult" to identify a financing shortage, noting that "U.S. capital markets are deep and liquid." Where there are "gaps," she said, they exist among "non-investment grade or unrated borrowers."