Export-Import Bank: Who Really Benefits?

Apr 21, 2014

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.

But don't take it from us. In January, Ex-Im Bank Chairman Fred Hochberg boasted of the Bank's "success with boosting international sales nationwide" and said "his organization can help small businesses take the financial risk out of exporting products and services."

Such rave reviews from the Chairman beg the question: how much are small businesses really benefiting from the Bank's activities? And, perhaps more importantly, if the Bank is taking the financial risk out of exporting products and services, who is bearing the risk?

The answer to the first question lies in which companies are receiving the lion's share of the Bank's backing?

The Heritage Foundation's Diane Katz, a research fellow in regulatory policy, shows that the most prominent beneficiaries of the Bank's subsidies are not small businesses but what she dubs "monster corporations." Among them are:

  • Boeing, the world's largest aerospace company, with a market cap exceeding $91 billion.
  • General Electric, the appliance and lighting conglomerate, valued at $267 billion.
  • Dow Chemical Co., the materials and chemicals producer, with 2013 sales of $57 billion.
  • Bechtel, the engineering and construction transnational, ranked by Forbes as the fourth-largest privately held company (by revenue).
  • Caterpillar, global purveyor of mining and construction equipment, with 2013 sales and revenues of $55 billion.
  • John Deere, the king of tractors and dump trucks, ranked 97th on the Forbes 500.

Talking about aiding small businesses and promoting U.S. jobs is great rhetorically, but the numbers don't justify the 80-year-old bank's existence. Massive multinational corporations don't need to dump their financial risks on taxpayers.

"A mere 2 percent or so of all U.S. exports receive ExIm financing," while "98 percent of American exporters are competing just fine without the bank's intervention," Katz said. Washington politicians know this. When President Obama signed the most recent Ex-Im Bank extension into law, he made sure to highlight Boeing:

Just to give you a couple of examples, Boeing relied on support from the Ex-Im Bank to strike a deal selling more than 200 planes to one of the fastest-growing airlines in the world. And that translates into thousands of jobs here in the United States. As long as our global competitors are providing financing for their exports, we've got to do the same. So I'm glad that Congress got this done. I'm grateful to members of both parties who came together and put the interests of the American people first.

"Relied" is a strong word. The truth is, Boeing would be just fine without the Bank. Fred Hochberg recently said "big commercial jet makers like Boeing tend to arrange their own financing." Indeed, Boeing is "confident the company could find alternative funding sources for customers" absent the Bank.

If Boeing -- and other multinational companies like it -- can arrange their own financing, and they're the Bank's biggest beneficiaries, there's no good justification for the Bank's continued existence.

That's true, at least, for 98 percent of American exporters who don't receive taxpayer backing or subsidies from the Bank. It's also true for taxpayers, who shouldn't be left on the hook. If Congress makes the wrong decision to reauthorize the Bank when its charter expires in September, that risk will only grow. As Katz notes:

The risk to taxpayers grows as the value of bank transactions increases - to $27.3 billion in FY 2013 alone, up 28 percent from four years earlier. Taxpayer exposure now totals $134 billion. However, the inspector general suggests that the bank's sloppy record-keeping obscures the actual amount of outstanding commitments, which likely exceed the $140 billion cap set by Congress in 2012.

It's clear this Bank is not about small business; it's about big businesses deferring risk to the American taxpayer.

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