Via Heritage Action:
Background: In 2012, legislation to reauthorize and increase Ex-Im’s lending authority by 40 percent, from $100 billion to $140 billion, passed in the House and Senate. With its charter set to expire at the end of September, a bipartisan coalition is advocating for another reauthorization. If it is not reauthorized, the bank will be unable to offer new loans, effectively grinding it to a halt and preventing it from distributing subsidies to new constituencies.
A two year fight is culminating in what should be the final standoff between true congressional conservatives and those members intent on pleasing special interests and the corporate welfare beneficiaries. It is more important than ever for concerned citizens to apply pressure to their representatives and see the mission through to the end. Stay armed with the facts of the case to End Ex-Im, and find out where your congressman stands!
- As a result of Ex-Im’s activity, taxpayer exposure will exceed $140 billion before the end of 2014.
- According to the Congressional Budget Office, Ex-Im will cost taxpayers $2 billion over the next 10 years.
- 98 percent of U.S. exports receive no assistance from Ex-Im.
- Of those that do receive financing, 75 percent goes to only 10 multibillion dollar, multinational conglomerates (e.g. Boeing, General Electric).
- Boeing alone received 66 percent of Ex-Im’s loan guarantees in 2013.
- Should Ex-Im expire, Boeing would be perfectly capable of arranging alternative, private-sector financing for its exports, and its representatives have said so publicly.
- In 2013, only $12.2 billion of Ex-Im’s $37.4 billion in total financing—less than one-third—was dedicated to counteracting subsidies from foreign export credit agencies.
Small Business Activity?
- Congress requires that 20 percent of the dollar amount of Ex-Im’s authorizations go to small businesses; however, Ex-Im fails to meet this statute nearly every year.
- Ex-Im’s definition of “small businesses” includes firms with as many as 1,500 workers and companies with revenues of up to $21.5 million annually.
- Ex-Im provides export financing for just 0.009 percent of all small businesses in America.
Controversy and Credibility?
- Ex-Im’s Inspector General has concluded that the bank ignores long-term economic impacts in its internal analyses.
- Both the Government Accountability Office and the Inspector General have warned that Ex-Im’s “loan-loss rate” is unreliable and that the bank is not properly protected against waste, fraud and abuse.
- In 2012, the Congressional Budget Office found that FCRA-based cost estimates, the kind that Ex-Im relies on, do not provide accurate accounting metrics, as they do not incorporate the full costs of the risk associated with the loans.
- In 2013, Ex-Im authorized $630 million in Russia-related transactions, including $32 million to help build a petroleum refinery, supporting Russia’s energy sector at a time when the country is using its energy dominance to hold client states hostage to its agenda.
- This year, former Ex-Im employee Johnny Gutierrez was fired amid allegations of accepting cash bribes in exchange for trying to help a Florida company obtain a loan guarantee.
- A Congressional Research Service report has confirmed that Ex-Im shifts jobs; it does not create them: “Economists generally maintain… that subsidizing export financing does not add to the overall level of economic activity, and subsidizes foreign consumption at the expense of the domestic economy. [Therefore], promoting exports through subsidized financing…will not permanently raise the level of employment in the economy, but alters the composition of employment among various sectors… and performs poorly as a jobs creation mechanism.”
- When Ex-Im bureaucrats hand out taxpayer-backed loans…
- Unsubsidized domestic businesses must face competitors backstopped by a government guarantee
- Subsidized domestic businesses grow lazy and complacent relying on federal assistance, and are further encouraged to use resources for lobbying rather than productive investment
- Market actors are encouraged to make bad investments by the distortion of true opportunity cost
- Consumers face higher prices, since subsidizing exports helps foreign consumers at the expense of domestic consumers
- In 2008, then-Senator Barack Obama denounced Ex-Im on the campaign trail: “I’m not a Democrat who believes that we should defend every government program. There are some that don’t work like we had hoped…[like] the Export-Import Bank that has become little more than a fund for corporate welfare.”
- On September 30th, 2014, Ex-Im’s charter will expire and it will be unable to continue operating.