Despite torrents of opposition to the Ex-Im slush fund for corporate welfare, the U.S. Chamber of Commerce is sticking to its guns. Last week, it released a series of “facts” to promote reauthorization of its charter this fall.
In the war to prevent its due extinction, the Export-Import Bank has hidden behind hard-shelled bureaucratic artillery. Its advocates concede certain dangers and cannot deny taxpayer exposure, but insist they have guarded against the worst. Offered as proof are the reform requirements, stress testing measures and protection provisions reflected in Government Accountability Office reports and the oft-cited recommendations of the Office of the Inspector General of the Export-Import Bank (OIG).
In other words, Ex-Im assures us it is on top of things and presents the in-house supervision of its Inspector General as proof. The IG conducts its scheduled audits, cites areas of concern and makes formal recommendations for reform.
The Obama Administration is notorious for the economically harmful and burdensome regulations it has imposed across the U.S. economy. Energy exports have not been spared. But rather than removing regulatory barriers to energy exports, some Washington politicians want to subsidize them at taxpayers’ expense.
The Export-Import Bank has been a channel for these energy export subsidies, so much so that 30 percent of the Bank’s loans and guarantees in 2013 went to producers of energy technologies and equipment.
The Heritage Foundation’s Nick Loris argues that the Ex-Im Bank should be eliminated, because it exists to provide corporate welfare to politically connected companies. It distorts markets and saddles taxpayers with risk.
“With billions at stake,” says the Seattle Times editorial board, “this state’s congressional Republicans, especially, now need to lead on the issue.”
This was the conclusion of a passionate defense of the Export-Import Bank, which the editorial board says is “of particular importance” to their state, “where about 40 percent of jobs are linked to international trade.”
The Bank’s charter is set to expire in September, which accounts for the editorial board’s sense of urgency. The Seattle Times lauds the Bank for the loans and loan guarantees it gives foreign companies to purchase goods and services from U.S. exporters, and they note that “90 percent of Ex-Im transactions support firms typically too small for commercial Banks.”
But in urging Congress to reauthorize the Export-Import Bank, the Seattle Times made two massive errors.
If you’ve heard the argument from Export-Import Bank proponents that the Bank profits the American people, you should see this:
Indeed, the bank’s purported profitability has been a major theme of proponents’ campaign to win bank reauthorization from Congress before its charter expires on September 30.
But in a major embarrassment for the bank and its allies—and a victory for government transparency and accountability—the Congressional Budget Office (CBO) on Thursday reported that Ex–Im programs actually operate at a deficit that will cost taxpayers some $2 billion in the next decade (in addition to the bank’s operating costs).
The bottom line: If forced to apply the stricter accounting rules required of private firms, Ex–Im would be overstating its profitability by $16 billion during the next decade: Instead of a 10-year surplus of $14 billion, the bank would incur a loss of $2 billion.