American companies have yet to fully recover from the Great Recession, labor markets remain volatile, and the national debt continues to grow now more than $17 trillion. And yet recent reports indicate that one federal government agency is continuing to hand out taxpayer-backed money to foreign and state-sponsored companies--many of which are already flush with resources--all the while leaving American-based employers twisting in the wind.
The worst transgressor is a federal agency known as the Export-Import Bank of the United States (Ex-Im Bank), which provides loans to foreign companies purchasing American goods. In theory, the Bank was designed to create jobs by increasing American exports. This is achieved by providing sub-market loan rates and favorable terms to foreign buyers, so that it is more affordable for them to purchase American-made goods. Supposedly, this creates U.S.-based jobs as the demand for domestic goods increases when prices are reduced.
However, the economic reality of the Bank’s practices is not consistent with how it operates. When Ex-Im provides a foreign company with a sub-market loan or guarantees that same loan, it also gives foreign companies a leg-up on their domestic competition. Since the Bank precludes U.S.-based companies from receiving these tender financing options, American employers are put at a distinct disadvantage, and ultimately workers suffer. As a result, Ex-Im’s loans have the unintended consequence of substantially retarding growth and sometimes even negatively affecting employment in our nation.
The Bank’s financing has been primarily allocated toward a single entity with approximately 80 percent of its total loan guarantees favoring the foreign purchase of Boeing aircraft. This is obviously great for Boeing, but in recent years the Bank’s decision to heavily bankroll foreign-based airlines has grown increasingly concerning. This is evidenced by a Wall Street Journal editorial which stated that, “[t]his subsidy means that foreign airlines can then buy newer aircraft more cheaply than their U.S. competitors. This gives them an advantage in the global air transportation market. In a letter to Congress last month, Delta estimated that Ex-Im cost the U.S. airline industry up to 7,500 jobs and $684 million a year.”
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