Americans are no strangers to the idea of loaning to people and businesses worthy of a helping hand, in order to get started and build a successful company. But how would they feel about opening their wallets for a loan program that benefits huge international corporations?
Right now there is an arm of the American government that is working to do just that, and it’s been happening for years. The Export-Import Bank (Ex-Im) subsidizes loans to foreign companies, which is supposed to encourage them to buy American exports. But instead, most of the money goes to just a few large, politically connected companies. For that reason, it might be better to deem Ex-Im the Beltway Bank for Cronies.
Back in 2008, then-candidate Barack Obama called Ex-Im a “little more than a fund for corporate welfare.”
The bank claims to support American small businesses, but research indicates otherwise. According to the Mercatus Center, in 2010, the Ex-Im Bank spent $13 billion on loans to these foreign companies — of which 90 percent went to just 10 large corporations. But when looking at the return, we only see that Ex-Im contributes 2 percent to U.S. exports.
Minnesotans should be incensed to hear that $1.3 billion in taxpayer dollars are going to fund Mexican oil company Pemex, while our own public lands languish undeveloped. Or how about the $500 million that is going to a Mongolian company that boasts $51 billion in revenue? These are just a few of the numerous egregious examples of the Ex-Im Bank financing. Can Minnesota afford this?
Furthermore, the bank has failed to manage appropriately and assess the risk to taxpayers. The bank has already once sought a multibillion-dollar bailout. Its risky investments are no longer something the American people can afford to fund.
Remember Solyndra, the solar energy company backed by President Obama? Well, that boondoggle is just one of the beneficiaries of the Ex-Im Bank. Others may remember Enron — not a paragon of sound investment and accounting. And yet Enron also received support from Ex-Im before it collapsed in scandal. Minnesotans shouldn’t stand for this kind of market disruption anymore. The government rarely does a good job choosing winners and losers. Why should it be our dollars on the line?
The Ex-Im Bank is looking for reauthorization this fall, requesting to expose us to a record $160 billion in loans and guarantees. Yet we can’t even trust it to properly calculate its affect on our nation’s bottom line. While Ex-Im leaders say they’ll create $14 billion in revenue over a decade, a study from the Congressional Budget Office shows that the bank’s six biggest programs actually will cost $2 billion over the next 10 years.
Misleading accounting gimmicks are just one more thing Minnesotans should have had about enough of at this point. And worse, the Government Accountability Office reports that Ex-Im lacks any apparatus to calculate the risk associated with the loans of our money.
In 2013, there were more than 8,600 exporters operating in the state of Minnesota. The Ex-Im Bank claims to have supported only 73 of them — not even 1 percent! Ending taxpayer-supported loans from the Ex-Im Bank would benefit Minnesotans by creating a more even playing field. Why would you pay for a service that is not aiding your business?
The Ex-Im Bank is slowly crumbling under growing pressure from Americans who don’t want to support large, multinational corporations on their dime before helping those at home. When it comes up for reauthorization in September, let’s say no to wasteful spending and big government. We have multiple representatives of our state on the House Financial Services Committee, which will help make the decision. I say it’s time for Minnesota to start leading the way in creating real economic growth — without all the cronyism.
John Cooney directs the Minnesota chapter of Americans for Prosperity.