President Was Right: Ex-Im Bank Is ‘Little More Than Corporate Welfare’
The usual suspects—by this I mean the usual defenders of corporate welfare and political cronyism—held a “lobbying day” at the nation’s capitol last month.
They were there to defend the Export-Import Bank of the United States, which for many decades, and for good reason, has been called by its critics “The Bank of Boeing.” Its charter expires October 1, and a battle over its possible extension is brewing between the political establishment and reformers.
Here’s how establishment the defense of the Export-Import Bank has become: In 2008, presidential candidate Barack Obama correctly declared the bank is “little more than a fund for corporate welfare.” Now that he is president and firmly seated atop the government Leviathan, Obama defends the bank.
At the opposite end of the political spectrum but also near the center of the political establishment sits the U.S. Chamber of Commerce, whose lobbyists were among those working the May 8 event. The chamber has labored many years trying to delude Americans into believing being pro-business is the same as being pro-freedom, pro-consumer, or pro-jobs. It is not.
Being pro-business is being pro-business. Furthermore, because businesses compete with each other, organizations such as the chamber cannot be for all businesses. They necessarily end up favoring some businesses over others, or government policies that favor some over others.
So it is with Boeing and the Export-Import Bank. Boeing’s customers include both domestic and foreign airlines. Because of the loans and guarantees the government’s Export-Import Bank gives to overseas buyers of Boeing airplanes, those overseas airlines often end up paying less for Boeing planes than domestic airlines pay. That’s called market distortion. In helping Boeing, the Export-Import Bank can end up hurting domestic airlines.
Boeing in 2012 received more than 80 percent of the Export-Import Bank’s largesse. Virtually every year, at least 40 percent of bank backing goes to Boeing.
Boeing’s revenue tops $80 billion annually. Other huge companies that show up on the list of companies receiving Export-Import Bank backing include General Electric Co., Caterpillar Inc., and Pemex (the Mexican government-owned oil company). In most years, 10 companies receive at least 75 percent of the bank’s backing. Some years it’s more than 90 percent.
Another example of establishment politics and cronyism: In 2010, Obama named Jim McNerney chairman of his Export Council. He is the former CEO of General Electric Aircraft Engines and current Boeing chairman and CEO. Think he wants to limit or eliminate government handouts for GE and Boeing?
All these huge companies have smaller competitors, and those “little guys” receive little or no support from the bank. It’s another example of Big Business being in league with Big Government.
The billions of dollars of Export-Import Bank backing goes to less than 2 percent of total U.S. exports. And there is every reason to believe that sliver of exports would have happened without the bank.
The United States exported $2.27 trillion of goods and services in 2013, a $61 billion or 2.7 percent increase from 2012. Yet Export-Import Bank loans actually declined by $8.5 billion in 2013. So U.S. exports grew even as bank loans declined.
The Export-Import Bank got its start in 1934. It’s a Great Depression-era relic that has always favored the largest and most politically powerful companies.
Congress should heed the words of our president from when he was a candidate who stood for something: The Export-Import Bank is “little more than a fund for corporate welfare.”
Steve Stanek (email@example.com) is a research fellow at The Heartland Institute in Chicago.