The clock is ticking on the Export-Import Bank’s upcoming reauthorization. For the larger part of the past eight decades, Ex-Im’s existence has continued unchallenged and generally conceded as just another example of “the way Washington works.” However, this year is different. Bipartisan support for closing Ex-Im, and ending its crony practices, has grown to an all-time high. Here are the top 5 reasons why it’s time to finally close the Ex-Im for good.
Ex-Im’s policy is to secure financing for companies that might not be able to secure it in the open marketplace. But that actually isn’t Ex-Im’s only mandate. Ex-Im only secures financing when the benefiting company has a high likelihood of paying back the debt. Companies that meet the former criteria may fail to be eligible under the latter, and vice versa. Companies with the high likelihood to pay back debt probably wouldn’t run into problems securing financing in the first place. In theory and in practice, Ex-Im’s dual mandate is nothing short of a massive contradiction.
There’s a reason Ex-Im is called “Boeing’s Bank”. It’s because over 40% of Ex-Im’s business “invests” in Boeing. In fact, the top 10 companies financed by Ex-Im swallowed up 76% of its entire 2013 budget. Sound like cronyism to you too? Ex-Im may call itself “pro-business,” but pro-market advocates know what’s behind the curtain.
Since we’re talking about crony businesses, we should also point out Ex-Im’s foreign beneficiaries. Foreign airlines such as Air India, Korean Air, Ryanair, and a dozen more have each received $1 billion in financing from Ex-Im since 2000. This isn’t just about American companies though. It’s the American worker who ultimately suffers most when Ex-Im plays favoritism with foreign companies.
When the power of the government’s purse is in the hands of the few, you better expect corruption. Exhibit A: Ex-Im’s own workers. Despite Ex-Im having only 400 or so employees, the Heritage Foundation recently found at least 74 potential cases of fraud at Ex-Im since 2009. Let’s just say these weren’t isolated incidents. The Wall Street Journal and Bloomberg News reported on separate high-profile allegations of Ex-Im employees receiving gifts and kickbacks from companies seeking Ex-Im financing.
Ex-Im’s supporters like to point out that foreign governments are using crony practices similar to Ex-Im. That betrays even the most basic ethics we’re taught even as children. Just because others are doing something wrong, it doesn’t mean you should too. While other governments misuse their citizens’ hard-earned tax dollars for corporate benefit, we should not feel obligated to do the same.
To learn more about why the Export-Import Bank of the United States needs to abolished, check out our recent OnPoint summary here.