By Eric Peterson
Earlier this week, 41 Republicans sent a letter of support to House Speaker John Boehner’s office in support of the Export- Import (Ex-Im) Bank reauthorization. The letter passionately argues that the taxpayer-backed bank is essential for economic health of our exports. Per usual, much of Congress is grossly misinformed.
One of the biggest myths repeated over and over is that the Ex-Im Bank is crucial for maintaining jobs and the health of US exports – as if without the benevolence of the bank, U.S. exports would essentially collapse. The letter claims that in 2013 “ Ex-Im enabled more than $37 billion in export sales from more than 3,800 U.S. companies, supporting approximately 205,00 American jobs all at no cost to the taxpayers.” This claim – and many others – are with misinformation and misdirection, so let’s go through them one by one.
Although it’s true that taxpayers subsidized $37 billion of exports in 2013 (via taxpayer-supported loans to giant corporations in countries like China and Russia) the Ex-Im Bank made up less than 2% of more than $2 trillion U.S. exports. The bank is hardly essential to the health of the export market at large. Similarly while the bank offers financing to small businesses (the definition of small business according to the bank often includes companies worth tens of millions of dollars) more than 76% of the banks loans in 2013 went to the top 10 beneficiaries.
The next claim stands on even more dubious ground. The “supported jobs” point has come under scrutiny from the Government Accountability Office because of the poor methodology Ex-Im uses to calculate their alleged “job creation.” Foremost, the Ex-Im Bank doesn’t differentiate between full-time, part-time and seasonal jobs, or even between jobs created and jobs maintained. Furthermore, the bank doesn’t consider what jobs would have been created in absence of the bank loans or destroyed due to them. For example, airlines in the U.S. say thousands of jobs have been lost due to heavily subsidized foreign airlines undercutting their prices—which the foreign companies are only able to do because they receive steep discounts made possible by the American taxpayer through Ex-Im financing. Similarly, Michigan miners and their representatives are worried about their ability to compete with Australia’s richest woman, Gina Reinhart, after her company received almost $700 million of taxpayer funds to build a large iron ore mine.
Not content to let the Government Accountability Office be the only respected government agency to question Ex-Im claims, the Congressional Budget Office recently brought into question the claim that the bank “costs taxpayers nothing.” Using the standard accounting method employed by other lending institutions, the Ex-Im actually costs taxpayers roughly $2 billion over the next 10 years.
It would be easy to believe the congressmen on this letter have simply been fed poor information by the Ex-Im Bank, but the incentives to spread these “facts” are immense. Well over half of the congressmen on this list received significant campaign support from some of the Ex-Im Bank’s biggest beneficiaries during the last campaign cycle.
While American taxpayers are on the hook, politicians and their big business allies – both here and abroad – line their own pockets, all at the expense of the American taxpayer.
It’s time to cut through the Beltway smokescreen surrounding Ex-Im, and put an end to the publicly funded gravy train it represents for politically connected companies and foreign corporations. It’s time to break the bank.