Bernie Sanders has consistently voted to kill the Export-Import Bank, a federal agency that subsidizes U.S. exports — and nearly all Republican candidates agree with him. Hillary Clinton, in contrast, has said, “I’d like to the put the Ex-Im Bank on steroids.”
Ex-Im is a minor issue in this election. But to get a good understanding into Hillary’s view of government, take a look at what her beloved agency does by digging a little bit into Ex-Im’s annual report, published last week.
There is a sharp contrast between the soaring rhetoric of the glossy report’s front section and the hard facts in the financial report at the back. The phrase “small business” appears 101 times in the annual report and the word “Boeing” doesn’t appear a single time until you reach the back section, which lists all of the long-term loans and guarantees of the past fiscal year. There, Boeing appears 20 times.
This relects Hillary’s populist rhetoric, layered as it is on top of corporatist governance and fundraising.
Out of the $7.9 billion in Ex-Im’s long-term guarantees last fiscal year, $5.5 billion went to subsidize Boeing sales — that’s 70 percent of Ex-Im’s largest category of financing. In total, Ex-Im provided $12.4 billion in taxpayer-backed financing. Only about $3 billion of that subsidized small business exports.
So while small business beat Boeing 101 to 0 in the annual report language, Boeing alone got more in Ex-Im subsidies than all small businesses combined.
Why does Boeing, which received a record number of aircraft orders in 2015, need a taxpayer subsidy? The same question applies to all of the 75 percent of the Ex-Im financing that subsidized big business exports.
“American exporters and their workers offer many of the world’s highest-quality goods and services,” the annual report explains, “but that may not be enough when they are up against government-owned and government-backed competitors. This is why EXIM Bank needs to ensure that there is a level playing field.”
(The phrase “playing field,” appears eight times in the annual report.)
Clinton similarly justifies the subsidies by pointing to other countries: “Other businesses from other countries have a strong partnership with their government, whether it’s state-owned enterprises from China or private companies from Europe.”
This foreign government interference forces us to subsidize our own exporters, Clinton and crew argue.
But then, why does our Ex-Im subsidize those very foreign governments?
We need Ex-Im to beat China, they say. But two of the airlines owned by the Chinese government, China Eastern and China Southern, pocketed a combined $1.3 billion in U.S.-taxpayer-guaranteed loans through Ex-Im last year.
Ex-Im financing is supposed to “fill financing gaps due to the lack of available commercial financing.” But one Ex-Im buyer is the Industrial and Commercial Bank of China. ICBC is the largest bank in the world, and it is owned by the Communist Chinese government. Ex-Im guaranteed a $217 million loan to ICBC last year.
The corporatist icing on the red cake was probably Ex-Im’s $23 million guarantee to the Export-Import Bank of China to buy tufting machines for oriental rugs to be made in China. That’s a heck of a way to compete against China’s Ex-Im.
A majority of the financing that Ex-Im itemized in its annual report went to state-owned companies — more than $5 billion, equaling-two thirds of Ex-Im’s long-term loan guarantees.
Beyond the word “Boeing,” there were other interesting omissions from the wordy part of Ex-Im’s annual report, such as any mention of the agency’s supposed “Deal of the Year.”
On Earth Day in 2015, Ex-Im awarded Siemens with both “Renewable Exporter of the Year,” and “Deal of the Year.” “Thanks to Ex-Im Bank financing, Siemens was able to export wind turbines manufactured in Hutchinson, Kansas and Fort Madison, Iowa, to Peru… The wind turbines are destined for use in the Marcona wind project and the Tres Hermanas wind project, which are located in close proximity in the Ica region of southern Peru and which are estimated to yield an aggregate 129 megawatts.”
Here’s the funny thing about the award-winning subsidy: it was offered after the fact. The Spanish developer had already bought the turbines, and some of them were already spinning by the time Ex-Im approved the loan.
The Marcona wind farm was up and running in April 2014. Three months later, Siemens announced it had won the sale for the Tres Hermanas wind farm, whose construction began in July 2014. Ex-Im didn’t finalize the deal until February 2015. So U.S. taxpayers were subsidizing a sale that had already happened between a German company and a Spanish company generating electricity in Peru.
You can’t blame Ex-Im for not writing that one up in its annual report.
Progressives who oppose corporate welfare and conservatives who believe in free enterprise oppose Ex-Im. If we get a progressive or conservative president, Ex-Im would be endangered. If we get Hillary Clinton, though, the Export-Import Bank of China and the corporate coffers of Siemens can expect even more U.S. subsidies.
Timothy P. Carney, The Washington Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Tuesday and Thursday nights on washingtonexaminer.com.
