By Eric Peterson
Why has the largest foreign holder of American debt received more than $7 billion in loans backed by U.S. taxpayers? To prop up foreign companies which directly compete with American businesses. The Export Import (Ex-IM) Bank of the United States has long been doling out risky loans to foreign countries and corporations under the banner of American job creation. Although a handful of of well-connected domestic companies benefit from these sweetheart deals, foreign companies and countries are often the biggest winners – reaping lucrative benefits thanks to the American taxpayer.
The purported goal of the Ex-Im Bank is to boost exports by giving loans to foreign companies to purchase American products. While a few big American companies unquestionably benefit from this arrangement, many others lose out. Worse, the bank uses taxpayer backed loans to subsidize some of America’s largest competitors – competitors who are already receiving their own domestic subsidies to boot.
As shown by the map, many of the largest loan recipients over the last two decades are fast-expanding economies with growth rates that have outpaced the U.S. in recent years. In fact one of those recipients, China, recently passed the United States in overall Gross Domestic Product by one measure. Another beneficiary of Ex-Im largess, Norway, currently ranks higher than the U.S. in per capita income. Still another, the Kingdom of Saudi Arabia, floats on an ocean of crude oil (a hot commodity currently trading at more than $100 a barrel). Is it really appropriate to ask American taxpayers to subsidize foreign loans to these nations?
Many of the foreign corporations receiving generous Ex-Im bank loans are some of the best financed and well-connected in their countries – if not the world. Pemex, the Mexican state owned oil and natural gas producer, received over $1.3 billion in loans during 2013 alone. Recently Pemex admitted that “serious corruption exists” within its business. China’s state-owned Air China received $558 million to purchase Airplanes from America’s Export-Import bank even though China’s own Export- Import Bank is estimated to have given out more than $110 billion in loans from 2009 to 2010. In fact, China’s own Export-Import bank even received an $18 million loan from our own Ex-Im Bank. If the Chinese government didn’t think these projects were worthy of putting Chinese tax dollars at risk, why on earth are American taxpayers on the hook?
American businesses are having a difficult time making ends meet with the weak recovery. The Ex-Im Bank providing taxpayer dollars to foreign competition certainly is not helping matters. It is time to put an end to corporate welfare, both foreign and domestic, and break the bank.