Corporate Welfare Rises from the Ashes | Commentary
By Christine Harbin There’s a reason only 14 percent of Americans approve of the job Congress is doing.
On the Friday before October recess, Rep. Stephen Fincher, R-Tenn., bucked his own party and joined 176 House Democrats to further expand corporate welfare in Washington, D.C. Using an esoteric parliamentary tactic called a discharge petition — which was last successfully used 13 years ago — this new majority forced legislation reauthorizing the Export-Import Bank to come directly to the House floor for a vote.
This is a stark departure from the committee process conservatives have been clamoring be reinstated. The two committees with jurisdiction over Ex-Im — the House Financial Services Committee and the Senate Banking Committee — have each decided not to move any reauthorization legislation. Each of the panels’ chairmen, respectively Rep. Jeb Hensarling, R-Texas, and Sen. Richard C. Shelby, R-Ala., have also been steadfast in their opposition to it. The House Oversight Committee also held hearings into corruption and other official misconduct at the bank.
They are absolutely right to oppose Ex-Im — and more of their colleagues should, too. A relic of Franklin Delano Roosevelt’s New Deal, Ex-Im is the embodiment of corporate welfare. It props up multi-national corporations with taxpayer-backed loans, loan guarantees and other financial assistance. If the loans tank, U.S. taxpayers are left holding the tab — which currently stands at $112 billion.
That’s why Congress let the bank’s charter expire in June. Yet the special interests that benefit from Ex-Im are desperate to reopen its doors. Their arguments come straight out of the corporate welfare playbook: By giving tax dollars to private businesses, the government supposedly grows the economy, creates more jobs, and makes money for American taxpayers.
This is all misleading at best.
Start with the most dubious claim — that Ex-Im mostly helps small businesses. That is plainly untrue. More than 93 percent of the bank’s loan guarantees went to just five major corporations in 2013. And last year, fully two-thirds of the bank’s total financing went to just 10 corporations.
All told, according to the House Financial Services Committee, less than 1 percent of 1 percent of small businesses benefit from Ex-Im.
This explains Ex-Im’s utter irrelevance on the broader economy. From 2009 to 2013, the bank supported less than two percent of total U.S. exports. And for those that use Ex-Im, private banks and insurers are willing and able to step in and meet their financing needs.
As for jobs, the only way Ex-Im “creates” jobs is by destroying others. The airline industry can attest to this. When Ex-Im subsidizes aircraft sales to foreign airlines, it places their U.S. competitors — who don’t qualify for the same subsidies — at a steeped disadvantage. The Air Line Pilots Association estimates just two of Ex-Im’s loans — out of the hundreds it has given to foreign airlines—has cost 7,500 jobs in the domestic airline industry alone.
The argument that Ex-Im is profitable is also untrue. That’s only possible using government accounting methods that don’t consider counterparty risk — aka, the same methods that showed Fannie and Freddie in the black. Accounting for this risk, the Congressional Budget Office estimates Ex-Im will cost taxpayers $2 billion over the next decade.
In short, Ex-Im is a loser for taxpayers, a loser for the economy and a loser for jobs. The only winners are the well-connected few that are used to feeding at the taxpayer trough.
Such insider connections are breeding grounds for corruption. Between October 2007 and March 2014, for example, there were 792 reported claims of fraud involving the Export-Import Bank and 124 investigations initiated by the bank’s Office of Inspector General.
Since 2009, there have been 85 indictments for fraud, bribery or other wrongdoing at the bank, with 48 criminal judgments. And from 2010 to September of last year, 66 years of prison sentences were handed down to employees of Ex-Im and its beneficiaries.
That’s why Fincher’s discharge petition is so incredulous. Despite Ex-Im being the poster child of Washington’s culture of corruption, he still managed to convince 41 other Republicans to work with essentially every Democrat to circumvent the committee process and bring the bank’s renewal directly to the House floor.
No wonder Americans don’t trust Congress. While back in the district, lawmakers denounce corporate welfare of any kind — but once back in Washington, many of them do everything possible to keep the tax dollars flowing. That’s inexcusable. Fincher’s colleagues should hold true to their word and vote against reviving Ex-Im once and for all.
Christine Harbin is the deputy director of federal affairs at Americans for Prosperity .
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