Export-Import-Bank
Here Are the Ex-Im Facts Ann Wagner and Claire McCaskill Don’t Want You to Know
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Rep. Ann Wagner’s Heritage Action Score is a disappointing 59. It’s about to drop even lower.Export-Import-Bank

Last week, the Republican from Missouri’s 2nd Congressional District came out strongly in support of cronyism by endorsing and vowing to fight for extending the Export-Import Bank.

From Wagner’s interview with National Public Radio:

“There is some talk about a short-term reauthorization, perhaps six or seven months on Ex-Im,” she said. “I’d like it to be longer than that. I’d like to find a way for Ex-Im to have the proper reforms and be with us so that we can compete abroad for a long time.,” Wagner said.

For four years, now, Rep. Wagner has asked us to trust her when she tells us she’s a principled conservative. That trust is now broken.

She says that “Ex-Im is about jobs; thousands and thousands of jobs.” But research shows that Ex-Im has no discernible effect on jobs in America. Not only is trust broken, but her credibility is shattered, too.

Senator Claire McCaskill (D-MO) joined Rep. Wagner in supporting Ex-Im, which then-Senator Barack Obama correctly described as a “fund for corporate welfare.” And Wagner wants us to trust her judgment?

Here are the facts on Export-Import Bank–facts Ann Wagner and Claire McCaskill don’t want you to know:

Cost?

  • As a result of Ex-Im’s activity, taxpayer exposure will exceed $140 billion before the end of 2014.
  • According to the Congressional Budget Office, Ex-Im will cost taxpayers $2 billion over the next 10 years.

Financing?

  • 98 percent of U.S. exports receive no assistance from Ex-Im.
  • Of those that do receive financing, 75 percent goes to only 10 multibillion dollar, multinational conglomerates (e.g. Boeing, General Electric).
  • Boeing alone received 66 percent of Ex-Im’s loan guarantees in 2013.
  • Should Ex-Im expire, Boeing would be perfectly capable of arranging alternative, private-sector financing for its exports, and its representatives have said so publicly.

Unilateral Disarmament?

  • In 2013, only $12.2 billion of Ex-Im’s $37.4 billion in total financing—less than one-third—was dedicated to counteracting subsidies from foreign export credit agencies.

Small Business Activity?

  • Congress requires that 20 percent of the dollar amount of Ex-Im’s authorizations go to small businesses; however, Ex-Im fails to meet this statute nearly every year.
  • Ex-Im’s definition of “small businesses” includes firms with as many as 1,500 workers and companies with revenues of up to $21.5 million annually.
  • Ex-Im provides export financing for just 0.009 percent of all small businesses in America.

Controversy and Credibility?

  • Ex-Im’s Inspector General has concluded that the bank ignores long-term economic impacts in its internal analyses.
  • Both the Government Accountability Office and the Inspector General have warned that Ex-Im’s “loan-loss rate” is unreliable and that the bank is not properly protected against waste, fraud and abuse.
  • In 2012, the Congressional Budget Office found that FCRA-based cost estimates, the kind that Ex-Im relies on, do not provide accurate accounting metrics, as they do not incorporate the full costs of the risk associated with the loans.
  • In 2013, Ex-Im authorized $630 million in Russia-related transactions, including $32 million to help build a petroleum refinery, supporting Russia’s energy sector at a time when the country is using its energy dominance to hold client states hostage to its agenda.
  • This year, former Ex-Im employee Johnny Gutierrez was fired amid allegations of accepting cash bribes in exchange for trying to help a Florida company obtain a loan guarantee.

Jobs?

  • A Congressional Research Service report has confirmed that Ex-Im shifts jobs; it does not create them: “Economists generally maintain… that subsidizing export financing does not add to the overall level of economic activity, and subsidizes foreign consumption at the expense of the domestic economy. [Therefore], promoting exports through subsidized financing…will not permanently raise the level of employment in the economy, but alters the composition of employment among various sectors… and performs poorly as a jobs creationmechanism.”

Subsidy Harm?

  • When Ex-Im bureaucrats hand out taxpayer-backed loans…
    • Unsubsidized domestic businesses must face competitors backstopped by a government guarantee
    • Subsidized domestic businesses grow lazy and complacent relying on federal assistance, and are further encouraged to use resources for lobbying rather than productive investment
    • Market actors are encouraged to make bad investments by the distortion of true opportunity cost
    • Consumers face higher prices, since subsidizing exports helps foreign consumers at the expense of domestic consumers

Political Climate?

  • In 2008, then-Senator Barack Obama denounced Ex-Im on the campaign trail: “I’m not a Democrat who believes that we should defend every government program. 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.
  • On September 30th, 2014, Ex-Im’s charter will expire and it will be unable to continue operating.

(Source: Heritage Action for America)

If we cannot trust Ann Wagner to take a principled stand against this small piece of Washington cronyism, how can we trust her to fight the really tough battles?

If we cannot trust Ann Wagner to tell the truth about Export-Import bank’s effect on jobs and the economy, how can we trust her to tell us the truth about other corporate welfare schemes?

If we cannot trust Ann Wagner to put principle ahead of K Street cronies, how can we trust her to represent us in Washington?

This isn’t about one small issue: this is about integrity, honesty, and philosophy of government. By her strong support of this “fund for corporate welfare,” Rep. Wagner has betrayed her own promises of principled conservatism. The people of her district deserve more respect and better representation.

I’ll let my questions to Rep. Wagner stew. Of course, she is welcome to answer them in the comments below. Over the next week or two, I will have to decide whether I can vote to extend Ann Wagner’s stay in Congress.

  • J. Marshall Saye

    Do we yet know the Changes that Ann speaks of? Could it be that they what make the bank good for the country? Lots of unanswered questions. Maybe we will get her thoughts.

    • It’s been almost a week, and Mrs. Wagner has made no attempt to answer. Likely because her position cannot be justified.

      I don’t see how “changes” could make a fundamentally progressive institution palatable to principled Hayekian conservatives, though. The bank places bureaucrats in the position of arbitrarily choosing among competing businesses for special government benefits. The bank authorizes government to injure some companies for the benefit of favorite companies. That is its purpose. And that purpose is fundamentally anti-freedom.

      No window dressing can make such a corrupt and corrupting institution pro-market.

  • Christine S

    I have made my decision for Nov I will NOT give Wagner my support. Vote libertarian!

    • I think voting Libertarian could become a trend in MO 2

  • “…philosophy of government.”

    Bingo.

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