Desperation can produce a wide variety of reactions: some people think on their feet and try to adapt, while others find themselves paralyzed with fear and repeat actions or arguments that make little to no difference. It turns out that outmoded government institutions fit the latter pattern.
Despite a looming threat to its very existence, the Export-Import (Ex-Im) Bank of the United States finds itself stuck. Their charter is due to expire in June, and their clumsy attempts to “rebrand” themselves as a friend to small business in order to curry favor with a skeptical Congress rely on the same tired tropes they’ve been recycling for some time. Even worse for the bank, claiming they’re essential to small business’ success over and over again has not – as they had apparently hoped – magically made it true.
A recent report in The Washington Post provided a rundown of the Ex-Im Bank’s latest sales pitch. Pulling no punches about their “threat of extinction from Congress,” the report describes an Ex-Im event – held in the supremely metaphorical setting of an office building in the midst of significant refurbishment – aimed at changing the perception of the agency. Ex-Im Chairman Fred Hochberg attempted to portray the bank as “an important tool for small businesses,” chiefly by providing anecdotal evidence and splitting statistical hairs.
Unfortunately for Ex-Im, the facts haven’t changed. Most of their funding – the Post notes it may be as much as 80 percent – is still channeled straight to major corporations like Boeing General Electric, and Caterpillar. Boeing is Ex-Im’s biggest beneficiary by a sizeable margin resulting in the government agency being known as “Boeing’s Bank.” Deals involving Boeing received $8.1 billion in Ex-Im support last year according to George Mason University’s Mercatus Center. This accounts for about 40 percent of the bank’s total authorizations.
Contrast this to Ex-Im’s reported authorizations for small businesses which, according to the Mercatus research, only made up 25 percent of the bank’s total funding. A single major corporation – which happened to bring in a record-breaking $90.8 billion in revenue last year – received 40 percent of Ex-Im’s taxpayer-backed funding, while each and every small business taken together only added up to 25 percent.
In fact, the true small business percentage may even be lower than that. A Reuters investigation last November revealed that the Ex-Im Bank had erred in categorizing hundreds of firms which received their funding, mistakenly labeling large companies and subsidiaries of major worldwide corporations as “small businesses.” Up to $3 billion in funding to these companies was “misclassified” and these record-keeping snafus are yet another reason to call the bank’s true impact on small business into question.
Ex-Im’s favoritism toward Boeing, however, is already well-established, making one of Chairman Hochberg’s assertions – as reported by the Post – especially puzzling. He said of his agency, “Our bottom line is American jobs.” Apparently he has not spoken to anyone employed in the U.S. airline industry.
The bank’s involvement with Boeing – again, about 40 percent of its business – mostly deals with the sale of Boeing aircraft to foreign airlines like Air India and Emirates. Boeing’s foreign partners receive significant support from their own government, plus additional financing from Ex-Im, which adds up to a nice deal on Boeing’s wide-body airplanes. This provides a competitive advantage for these airlines which ends up hurting their competitors – carriers based here in the United States. According to the Air Line Pilots Association, thousands of jobs have been cut at domestic airlines because the Ex-Im Bank uses taxpayer-backed funding to support their foreign competitors.
This hardly suggests that American jobs are really Ex-Im’s “bottom line.” What it does suggest is that the bank will do or say anything they think will help spare them from being shut down in June, including falling over themselves to distract from their cozy relationship with Big Business. Hopefully their smoke-and-mirrors routine will fall on deaf ears in Congress.
Join the conversation as a VIP Member