Robert Luddy writes in USAToday:
Recently, I stumbled across a surprising statistic. According to a January Rasmussen poll, 71% of Americans believe that “government gives special treatment to companies with the most political connections.” I was initially surprised that this number was so high. Now, after watching the unfolding fight in Washington over the U.S. Export-Import Bank, I’m surprised it wasn’t higher.
The little-known agency is one of the business community’s favorite federal programs. It provides taxpayer-backed financial support to foreign and domestic companies, supporting less than 2%of American exports along the way. It has also become politically toxic over the past decade. In 2008, then-candidate Barack Obama called it“little more than a fund for corporate welfare.” A small group of Republican legislators made the same argument prior to Ex-Im’s 2012 reauthorization. After that, opposition to the bank grew so quickly that in 2014, legislators only reauthorized it for nine months. The bank’s charter is now set to expire at the end of June.
Today, two high-profile campaigns are trying to sway Congress on the bank’s future. On the one side are a large number of federal lawmakers, prominent business associations, and an army of lobbyists, all of whom benefit from Ex-Im’s existence. On the other side are grassroots activists, non-profits such as Freedom Partners Chamber of Commerce, which I support, and a smaller group of elected officials, includingalmost every Republican presidential candidates, who point out that the bank isn’t what it claims to be.
The weight of evidence is on their side.The claims made by the bank’s backers and beneficiaries frequently don’t add up.
One example in particular stands out: the bank’s insistence that it primarily serves small businesses. This is perhaps its favorite talking point, if Ex-Im’s annual reports are any indication.Put aside, if you can, that Ex-Im defines a small business as having up to 1,500 employees or $21 million in annual revenues, depending on the industry. That may count as a small business in Washington, D.C., but you’d be hard-pressed to find anyone in my home town of Raleigh, N.C. who’d agree. A look at the bank’s own data raises additional problems. In 2014, small businesses received only a quarter of Ex-Im’s money. In 2013, they received less than a fifth. And according to a news report last year, the bank also potentially mischaracterized hundreds of big businesses as small ones, including firms owned by Warren Buffett and Carlos Slim Helu, the second and third richest individuals in the world.
The real beneficiaries are major companies across the globe. In 2013, nearly two-thirdsof the bank’s assistance benefited only ten companies —and nearly one-thirdbenefited only one company, Boeing. These same companies are now donating to politicians and hiring lobbyists in an effort to keep Ex-Im’s doors open.
As for the bank’s foreign beneficiaries, a staggering number are state-owned, fromRussia to China to Saudi Arabia to other countries around the globe. Strangely, America’s Export-Import Bank even sends our taxpayer dollars to its counterpart in China. So much for “small business.”
