The Export-Import Bank, denounced by Sen. Barack Obama in 2008 as "little more than a fund for corporate welfare," gives loan guarantees and other forms of supra-market financing to foreign countries and companies that buy American exports. Well, products made by the handful of companies that get this sweetheart backing.
One of the single-biggest beneficiaries of Ex-Im backing is Boeing, a struggling little airplane-making outfit with a market value north of $90 billion. According to Reason columnist and Mercatus Center policy scholar Veronique de Rugy, between 2007 and 2014, companies with operations in Washington state accounted for 44 percent of total disbursements of Ex-Im largesse. By which she means Boeing.
The Ex-Im Bank—which President Barack Obama supports—is a pure example of concentrated benefits and distributed costs. Writes de Rugy:
The truth of the matter is that the Ex-Im Bank yields negligible benefits for the vast majority of state exports, aside from one big outlier. These charts make it clear that the Ex-Im Bank primarily exists to benefit Boeing at the expense of everyone else in the country.
You might wonder why lawmakers would refuse to acknowledge this reality. For one, politicians are pressured by an army of lobbyists representing powerful companies who are committed to protect their perks even if it hurts everyone else. But politicians are not exactly shrinking violets, here. They like being able to point to the small businesses and American jobs that they "support" through the Ex-Im Bank.
What is much harder is to point to the millions of victims of the Ex-Im Bank. Taxpayers, for instance, bear a massive $140 billion exposure so that giant corporations like Boeing and General Electric can make a little more profit each year. Should the bank's portfolio go south, normal people like [us] will be on the hook.
Read the whole column at the Washington Examiner.
When Rep. Kevin McCarthy came in as House Majority Leader in June (after Eric Cantor was sent packing in his primary), his first big, bold statement was to say House Republicans would act to kill the Export-Import Bank, which comes up for reauthorization at the end of September. With few exceptions, GOP members are already starting to dodge that stand, instead talking about how they'll only vote for its renewal if stringent new reforms are put in place. At the Lincoln Labs Reboot conference in San Francisco, I spoke with Rep. Cathy McMorris Rodgers, a Republican who hails from eastern Washington. When I asked point blank whether she would vote to kill the bank, she said she was waiting on what reforms might be included in the reauthorization. "There's some questions that need to be answered," she told me. "I'll see what that looks like when it comes." In other words, put her down for a yes.
McMorris Rodgers, who voted to reauthorize in 2012, is hardly alone in her position. In 2012, all Democratic senators voted in favor of the bank, along with 27 Republicans (19 Republicans voted against it). In the House, 183 Democrats and 147 Republicans voted in favor of it, with just 93 Republicans and zero Democrats voting against. All eight members of the Washington state delegation (four Ds and four Rs) voted in favor, as did both Democratic senators.
From a small-goverment perspective, there is no reform that can "fix" issues with the bank's operations, since it shouldn't exist in the first place. It absolutely helps pick winners and losers in the marketplace by backing the purchase of some companies but not others and, more important, puts taxpayers on the hook for up to $140 billion in loan guarantees. Which of course cost nothing—until they cost a lot.
Watch Reason's "3 Reasons to KILL the Export-Import Bank FOREVER!," featuring a special appearance by Art Vandelay: