The Export-Import Bank Story the Post-Dispatch Refused to Print
Since the Post won’t run my reply a recent op-ed about the Ex-Im Bank, I’ll publish it here:
Huge multi-national corporations like to preach from the “small business” bible when it comes to the Export-Import bank. Unfortunately, most of the Ex-Im propaganda about how “small business” benefits crumbles under scrutiny.
Professor Stanford Levin of Southern Illinois University recently wrote an Op-Ed supporting reauthorization of the Export Import Bank. As the professor states, the Export-Import Bank provides cheap loans to foreign companies and governments with which to buy products sold by mostly large, multi-national companies with headquarters in the United States.
But the professor failed to mention the details of his various arguments for the bank. Here are some important details that might change Professor Levin’s view of the bank:
Stanford doesn’t mention the Export-Import Bank’s definition of “small business.” According to Ex-Im, a small business has up to 1,500 employee and revenue of $21 million. So the Ex-Im idea of small is relative. Yes, 1,500 employees looks small to AT&T and Boeing, but it looks enormous to the small business owners I know.
Stanford claims “90 percent of the agency’s transactions last year were for small-business exports,” but he doesn’t tell you that a “transaction” is an application processed, not the amount of financing provided. The distribution of applications to Ex-Im is a meaningless statistic that only an economist could like.
Stanford fails to disclose how Ex-Im allocates financing between large and “small” businesses, but I will. In 2013, “small businesses” received less than 20 percent of Ex-Im authorizations (source https://www.exim.gov/about/library/reports/annualreports/2013/FY2013-auth-summary-and-small-business-auth.pdf). As Heritage Foundation Research Fellow Diane Katz found: “Multinational corporations attract the largest proportion of Ex–Im financing, including the construction and engineering firm of Bechtel, ranked by Forbes as the fourth-largest privately held company by revenue, and Lockheed Martin, valued in excess of $50 billion. But the bank’s foremost beneficiary is Boeing, the world’s largest aerospace company (with a market capitalization exceeding $91 billion). In the past five years, the company has profited from 197 Ex–Im deals totaling $48 billion. Last year alone, Boeing-related financing comprised 30 percent of all Ex–Im activity.”
Nor does Professor Stanford inform your readers that Ex-Im hurts American works. For example, Delta Airlines and the Airline Pilots Association sued Ex-Im last year for providing unfair competition through loans to foreign airlines for which US airlines are ineligible.
Sadly, Ex-Im provides a lot of funding to America’s adversaries. Last year alone, Ex-Im provided business assistance to Chinese companies worth $638 million and Putin’s Russia worth $630 million.
The Inspector-General of Ex-Im disputes Professor Stanford’s claim that “the Export-Import Bank exercises due diligence before issuing credit.” In its latest report to Congress, the Export-Import Banks’ IG says, “One of the consistent observations arising out of audits, evaluations, and investigations conducted by the OIG are weaknesses in governance and
internal controls for business operations.” (Source: https://www.exim.gov/oig/upload/OIG_Report_FA13_508.pdf.)
- There is no evidence that Ex-Im creates American jobs, as the professor implies. According to Heritage Research Fellow Diane Katz, “the bank does not count actual jobs related to its projects but simply extrapolates numbers based on national data. This formula does not distinguish among full-time, part-time, and seasonal jobs. It also assumes that average employment trends apply to Ex–Im clients (who may not be typical).”
Clearly, the Export-Import Bank’s crony capitalist proponents like to play fast and loose with the facts. Just as clear the fact that the Ex-Im bank is a trough for feeding well-connected corporate welfare queens. It’s time to end the Export-Import Bank.