Corporate welfare is on the march on Capitol Hill. A bipartisan posse of lawmakers has proposed a bill to expand the Export-Import Bank (a federal agency that subsidizes exports) and limit its accountability, all without providing an iota of reform.
If the corporate-friendly senators pull this off, it will demolish the “reformer” image that Democrats like Elizabeth Warren try to burnish. It will also destroy any pretense to conservatism by the GOP majority, and it will show a lack of principle by the Republican leadership.
Ex-Im extends taxpayer-backed financing to foreign buyers of U.S. goods. Thanks to the efforts of conservatives, the agency has been hobbled for four years. In mid-2015, its authorization lapsed. Currently, its board has been unable to form a quorum, limiting the sort of corporate welfare it can dole out.
Kyrsten Sinema is a champion of corporate welfare. In her Senate election in 2018, she got more cash from lobbyists than any other nonincumbent. She’s the chief co-sponsor of the bill expanding and extending Ex-Im. Sinema’s original cosponsors include three senators extremely close to Boeing: Democrats Patty Murray and Maria Cantwell of Washington state and Republican Lindsey Graham of South Carolina.
The lion’s share of Ex-Im financing — 40% in a typical year — finances Boeing exports. Hence the nickname, “Boeing’s Bank.”
Yes, Boeing needs help these days, but not on the financing front. After Ex-Im’s charter lapsed in July 2015, the agency’s board of directors lacked a quorum until May 2019. Without a quorum, Ex-Im couldn’t approve deals greater than $10 million, which meant Ex-Im couldn’t finance Boeing exports.
Boeing didn’t just lay down and die. Instead, it assembled a ton of financiers — insurers, lenders, guarantors — into an aircraft financing conglomerate of sorts. The result: The most robust, competitive, and innovative aircraft financing situation in history. It turns out that Boeing likes Ex-Im, but Boeing doesn’t need Ex-Im, because private lenders were always there, ready to take its place.
Small business doesn’t really get a boost from Ex-Im. The most comprehensive study ever done on the effects of Ex-Im concluded flatly that “EXIM authorisation to small businesses does not have an impact on their exports.”
So, why are lawmakers pushing a bill to extend and expand Ex-Im? Sen. Chris Coons, the Delaware Democrat, has almost no manufacturing in his home state, and yet is standing by Sinema’s side. The most generous explanation: Coons is a vociferous champion of foreign aid, and he sees Ex-Im as a foreign policy tool.
But Ex-Im is not a foreign aid agency, and it is not calibrated to be a foreign policy tool.
Coons, for instance, worries aloud about China’s designs on the rest of Asia and on Africa. He points to the ways Beijing’s State Owned Enterprises, or SOE’s, such as the Export-Import Bank of China, finance ports and other infrastructure in developing countries, and then exert Chinese control over them.
This is a valid fear. But the U.S. Export-Import Bank doesn’t battle China’s state-owned enterprises. Rather, it subsidizes them, immensely.
China actually gets more money from U.S. Ex-Im than anyone else. In 2014, the last year the agency was fully operable, Ex-Im authorized $2.26 billion in financing to China, more than to any other country. In fact, China got more money from Ex-Im that year than did all of Africa combined ($2.06 billion). And a vast majority of our financing to China went to companies owned by China’s government.
In fact, the very Chinese state-owned companies involved in spreading China’s influence around globe — companies like the Industrial and Commercial Bank of China, and China’s own Export-Import Bank — receive subsidies from U.S. Ex-Im. For instance, in each of the the three fiscal years before Ex-Im’s charter lapsed in 2015, the agency extended loan guarantees to the Export-Import Bank of China, adding up to $55 million.
So, U.S. taxpayers are subsidizing China’s subsidy agencies. Ex-Im has also subsidized China’s state-owned nuclear enterprises, including subsidies to the China National Nuclear Corporation, right after that entity was caught proliferating nuclear weapons materials in the late 1990s.
Russia was in the top 5 of Ex-Im recipients in fiscal year 2014 (again, the last fiscal year of full operation), and almost every penny of that went to Putin’s state-owned businesses.
Coons and Sinema’s bill does nothing to curb Ex-Im’s fondness for subsidizing China’s Communist government and Putin’s thug regime. The bill imposes no restrictions on the destination of Ex-Im financing and actually reduces the agency’s accountability by extending the agency’s charter for an unprecedented 10 years and by removing the requirement that the board retain a quorum in order to approve mega-deals.
Their bill also does nothing to steer Ex-Im away from dedicating most of its financing to Boeing who, as the last five years of robust private-sector financing have proven, does not need Ex-Im.
The simplest explanation of Sinema’s bill is corruption. Lawmakers are excessively beholden to special interests such as lobbyists, financiers, and exporters who like getting favors from Uncle Sam.
A more charitable explanation is that these lawmakers have unwarranted faith in a government agency to boost the economy or to boost America’s interests overseas. Anyone paying attention knows better.
