There are countless examples of cronyist policies passed by Congress. Some would point to bailouts for Wall Street and automakers, while others would remind us of the loans and subsidies for green energy companies. While these are all good examples of cronyism and corporate welfare that are frequently mentioned by critics, the Export-Import Bank is frequently overlooked.
Authorized by Congress in 1945 to promote goods and services produced in the United States to be sold across the world, the Export-Import Bank (Ex-Im Bank) has become a source for bureaucrats to pick winners and losers in the market place and politically-connected businesses to take advantage of taxpayers.
Back in December, Pete Sepp, Executive Vice Chairman of the National Taxpayers Union, noted the Ex-Im Bank has a history of subsidizing failed firms — with a $10 million loan to Solyndra serving as an example — as well as giving money to profitable businesses, including Boeing, General Electric, Caterpillar, and Dell.
“In order to keep its portfolio from sagging and putting taxpayers on the hook for future Solyndras, the bank must often invest in large, established firms that are already highly profitable. Over the years this has included firms such as General Electric, Caterpillar, and Dell,” wrote Sepp. “Another example is aerospace giant Boeing. In 2012, nearly 83 percent of the loan guarantees issued by the Ex-Im Bank benefitted Boeing, meaning of the $14.7 billion in loan guarantees, $12.2 billion helped bolster the company’s sales.”
Sepp also noted that the Ex-Im Bank can also be counter-productive in its goal of helping American businesses. “Ironically, Ex-Im’s mission of aiding U.S. companies like Boeing in their battle against often-subsidized foreign competitors means collateral damage here at home,” he noted. “Domestic carriers have been forced to cut jobs and international routes as they suffer from an unfair system where the U.S. underwrites equipment-financing for foreign airlines. One U.S.-based carrier estimated that the Ex-Im Bank costs the domestic airline industry up to 7,500 jobs and $684 million per year.”
Despite the rampant cronyism and unintended consequences of the Ex-Im Bank, Congress reauthorized it just last May with limited opposition. The House overwhelmingly approved the legislation, 330-93, and the Senate, 78-20 — with virtually all the opposition coming from fiscal conservatives.
But a recent controversy over the Ex-Im Bank is bringing new scrutiny. Just last week it was discovered that First Solar, a struggling company that received $455.7 million from the Ex-Im Bank, had paid the Center for American Progress (CAP) to lobby on Capitol Hill and praise it during congressional hearings. This was made even when it was revealed that the CAP didn’t disclosure the payments.
On Thursday, Sen. Mike Lee (R-UT) and Rep. Justin Amash (R-MI) rolled out legislation that would repeal the Ex-Im Bank.
“The Export-Import Bank is a source of corporate welfare that puts taxpayers at unnecessary risk,” said Lee in a press release from his office. “Instead of subsidizing exports, which encourages an international corporate subsidy bidding war, we should be using multilateral agreements to eliminate business subsidies in all nations. The Ex-Im Bank has outlived its usefulness and it’s time to end the Bank’s market distortion and political cronyism.”
Amash, who will carry the legislation in the House, explained the the Ex-Im Bank has “always been a bad idea and needs to be shut down.”
“Export subsidies, like those provided by the Export-Import Bank, serve only to enrich well-connected special interests at the expense of the rest of the country,” he added.
The Club for Growth, a free market-minded organization that opposed reauthorization of the Ex-Im Bank last year, was quick to get behind the legislation. In a press release, Club for Growth President Chris Chocola called Lee and Amash “true champions of economic freedom,” praised them for “go[ing] to bat for the taxpayers,” and urged Congress to pass the legislation.
“Even President Obama has called the bank nothing more than a slush fund for corporate welfare,” added Chocola. “The Club for Growth strongly supports the efforts of Senator Lee and Congressman Amash to end these taxpayer-backed subsidies once and for all.”
The Ex-Im Bank serves no real purpose at all except to bailout the politically-connected. It’s well past time to separate business and state. If a business wants to succeed, it should be able to stand on its own merits, without any funding from taxpayers. Kudos to Lee and Amash for trying to roll back this sort of cronyism and corporate welfare.