Fasten your seatbelts, folks. The debate over huge taxpayer subsidies for Boeing and other corporate high-fliers is getting more turbulent by the day.
At issue is whether Congress ought to reauthorize the Export-Import Bank, which provides subsidized financing for export deals involving billionaire businesses such as the aforementioned aerospace conglomerate as well as General Electric, Caterpillar, John Deere, and Bechtel.
Allowing the bank’s charter to expire is the rational course of action. But with opposition to this particular form of corporate welfare on the rise, Ex-Im officials have turned to dirty tricks to undercut their critics (not unlike their bureaucrat-brethren at the IRS).
A great letter to the editor today in the Chattanooga Times Free Press
. Mike Budnick from Winchester, Tennessee called the end of the Export-Import Bank “long overdue.”
Congress will soon consider whether or not to reauthorize the Export-Import Bank. Like many well-intentioned government programs, the bank has morphed into a cronyism stash for well-connected special interests.
On Friday, the U.S. Export-Import Bank will hold a “Small-Business Exporter Boot Camp
” at their 2014 annual conference in Washington, DC. The description of the session excitedly states
Learn from successful small business exporters how they are using Ex-Im Bank financing to grow their business profits and sell their products globally. Great for first timers!
It’s true. Some small business owners are perfectly content benefiting from taxpayer-backed loans to foreign companies if it means they can export their products without taking the financial risk other exporters take.
By subsidizing corporations that compete against U.S. companies, Ex-Im disadvantages elements of the domestic private sector. For instance, Ex-Im has enabled foreign carriers to purchase Boeing aircrafts at what amounts to a discount, allowing them to have lower fixed budget costs than their U.S. counterparts. Delta Air Lines sued Ex-Im, citing that the Bank helped foreign carriers such as Air India acquire aircrafts on favorable loan terms that Delta cannot find on the commercial market, making it harder for Delta to remain competitive.
“I’m not a Democrat who believes that we can or should defend every government program, just because it’s there. 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… If we hope to meet the challenges of our time, we have to make difficult choices. As President…I will eliminate the programs that do not work and are not needed.”
- Barack Obama, Campaign Trail, 2008
Background. In 1934, Franklin D. Roosevelt created the Export-Import (Ex-Im) Bank to “facilitate exports and imports and the exchange of commodities between the United States and other Nations…”. This aid now takes the form of loans and loan guarantees, as well as working capital and credit insurance, to both U.S. exporters and foreign purchasers of American goods and services (including foreign governments). In essence, the Bank attempts to stimulate job creation and counter the subsidies provided by foreign governments to competitors overseas. This interference in and manipulation of the market invites economic distortion, cronyism and corruption.