Somewhere in the long list of failed government programs, there still exists an agency that subsidizes some of America’s wealthiest corporations to the detriment of American employers. During a time when most Americans are cutting back financially, a federal agency known as the Export-Import Bank (Ex-Im Bank) is providing monetary assistance to those that need it least.
For some time now, the Ex-Im Bank has been giving financial assistance in the form of loan guarantees to Fortune 500 companies that generate billions of dollars in profit each year. Most prominent is Boeing, which has received more than 8. 2 percent of Ex-Im’s total loan guarantees or roughly $12.2 billion in 2012. Boeing hardly needs the financial assistance seeing that this very same year the company generated more than $80 billion worth of revenue.
While this might not be enough to constitute government malpractice, it is also a fact that these loans are hurting American jobs and companies. In essence, the Ex-Im Bank enables foreign carriers to purchase Boeing aircraft at a discounted rate and with favorable terms. Thus, foreign airlines have lower fixed budgets and are thereby given a competitive advantage over their American counterparts, which have traditionally been prohibited from accessing such assistance. Some estimates calculate that the Bank has caused the U.S. airline industry to lose as many as 7,500 jobs.
Such collateral damage was never meant to be part of the Ex-Im Bank’s mission. In fact, the Export-Import Bank was originally established in 1934 to, ironically, promote American competitiveness. However, like many big-government programs as of late, the Ex-Im Bank is completely out of control. It now serves to enrich well-connected special interests at the expense of the rest of the country.
Such cronyism is most evident in the green energy sector, an industry that has been one of the largest benefactors of Ex-Im’s corporate welfare. The most notorious example is Solyndra, a solar-panel maker that received a $10.3 million loan guarantee from the Bank in addition to a $535 million stimulus loan from the Department of Energy. Despite receiving millions of dollars in taxpayer backed capital, the company went bankrupt. It is perplexing that a company with such weak financial health received so much taxpayer money, but perhaps it was related to the hundreds of thousands of dollars Solyndra spent on lobbyists or the large Obama campaign contributions bundled by one of Solyndra’s lead investors. Unfortunately, this is not the first or last time that Ex-Im has engaged in risky financial transactions. Ex-Im has provided financial assistance to a cacophony of financially troubled companies, including Abound Solar and Enron, proving that government should not be in the business of picking winners and losers.
Last year, Congress took notice of Ex-Im’s malfeasance and reauthorized the Bank’s charter with the understanding that it would begin to wind down operations and analyze its economic impact going forward, so as to ensure that no American employers were negatively affected. Unfortunately, the Bank has thus far failed to adhere to the law. The Ex-Im Bank has shown no signs of slowing down and continues providing loans to foreign entities at the expense of American companies as it quickly approaches its $140 billion lending limit.
Clearly, Congress needs to take a more aggressive approach in reining in the Bank’s largess. And that is why Senator Mike Lee and Congressman Justin Amash have introduced legislation to phase down the Export-Import Bank. The Bank has displayed a rampant disregard for the best interests of the American people, often favoring foreign entities at the expense of their American competitors. This rogue agency has additionally ignored Congressional oversight and perverted markets by instilling political cronyism.
While it is critical that American policymakers remain vigilant in their support of U.S. exports, a federal agency should not be at the epicenter of financial decisions that expose taxpayers to risk, particularly when private institutions are capable of efficiently approving or rejecting such transactions. In short, our country should not be financing a race to the bottom, where corporations are competing in an international subsidy bidding war that leaves our employers at a disadvantage. Instead, we should eliminate the Export-Import Bank and work with other countries to reach multilateral agreements to reduce subsidies in all nations.