The Republican-led House of Representatives has voted to reauthorize the physical embodiment of crony capitalism that is the Export-Import Bank. The Senate shouldn’t follow the House’s lead.
Conservatives on Capitol Hill managed to kill the Export-Import Bank earlier this year, but in a rare display of “bipartisanship,” 62 Republicans teamed up with 184 Democrats to force a vote to reauthorize the much maligned agency.
Supporters of reauthorizing Ex-Im argue that it has cost Americans jobs and has put U.S. companies at a competitive disadvantage with the rest of the world. But in reality, companies using the bank’s slush fund routinely ship jobs overseas, and the bank primarily benefits only a few, well-connected corporations.
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Using a rare procedural move known as a “discharge petition,” House Democrats and a band of big-government Republicans circumvented the House GOP leadership and forced an Ex-Im reauthorization vote. On Oct. 27, the House voted in favor of reauthorizing Ex-Im 313-118, leaving the ultimate fate of the bank in the hands of the Senate — which voted 67-26 to reauthorize Ex-Im back in July.
Senate Majority Leader Mitch McConnell, who opposes the Export-Import Bank, says he won’t take up a stand-alone measure to revive Ex-Im, but that pledge alone doesn’t mean the bank will remain dead. Sen. McConnell has said that the Senate could vote to reauthorize Ex-Im if it is a part of a larger highway spending bill.
Business interests and the politicians associated with them have pushed hard to revive Ex-Im. The bank provides loans and loan guarantees to foreign customers purchasing U.S. goods and services. Supporters of Ex-Im argue that without the bank, American companies are shut out from bidding on certain types of major overseas infrastructure projects and sell less to overseas customers, costing Americans jobs.
But the reality is that the biggest beneficiaries of Ex-Im’s taxpayer-backed subsidies, companies like General Electric and Boeing, have been shipping jobs overseas all along, even when the bank was in place.
Earlier this year, a Watchdog.org investigation found that GE and 130 other companies that export products using Ex-Im loan guarantees have been eliminating or shipping thousands of jobs overseas while benefiting from the agency. Since 2006, at least 5,600 U.S. jobs have been eliminated by companies receiving Ex-Im support. The actual number is likely much higher, but the Department of Labor only has specific job-loss numbers on 34 companies. Another 131 company records simply note that jobs were sent overseas without listing a specific number.
We can extrapolate how many more jobs were shipped overseas through corporate filings. For instance, GE’s show that since 2006, the company has reduced its U.S. workforce by 19,000 while increasing its foreign workforce by 5,000 jobs. Since 2001, the crony-company shed 34,000 jobs in the U.S. while adding 24,000 overseas. Boeing has similarly outsourced thousands of jobs while receiving billions from Ex-Im to “support” U.S. jobs.
Will businesses suffer from the loss of the Export-Import Bank? At the margins it’s likely, but the businesses that will suffer aren’t the mom and pop shops you’ll find on Main Street; they are the likes of Boeing and GE.
Boeing in particular has received a mind-boggling amount of financial support from the Ex-Im Bank. Over a two-year span, from 2007-08, Boeing received 65 percent of Ex-Im’s loan guarantees — a total of almost $10 billion dollars. Boeing is a company that had $152 billion in orders last year. It doesn’t need taxpayer money to help it sell planes.
The private sector is perfectly capable of providing credit to buyers interested in purchasing U.S. goods. Boeing and GE themselves are perfectly capable of providing in-house financing for foreign buyers. If the buyers aren’t credit-worthy enough for a private sector loan, then why should that risk fall on the backs of U.S. taxpayers?
Supporters of Ex-Im note that so far, it has been profitable to taxpayers. But the Congressional Budget Office noted in testimony before Congress last year that under common accounting methods (not used by Ex-Im), the bank would cost taxpayers $2 billion by 2024.
The Export-Import Bank is the definition of crony capitalism. It distorts markets by picking winners and losers, often favoring multi-billion dollar politically connected corporations. The bank does little to support U.S. jobs; instead, it helps foreign companies obtain cheap financing — crowding out the private sector. Don’t let the corporate-welfare-receiving cronies scare you into supporting the revival of the Export-Import Bank. It should stay dead.
Victor Nava covers state and federal regulatory policy for the Franklin Center for Government and Public Integrity. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
