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A corporate welfare confab

For the millions of Americans who think big business and big government are in cahoots, a little-known event held in D.C. on April 7 and 8 proved them right. Corporate bigwigs and federal bureaucrats gathered at a luxury hotel fit for the 1%—to discuss how to enrich themselves at the taxpayer’s expense.
The event was the U.S. Export-Import Bank’s annual conference. The Ex-Im Bank, as it’s widely known, is a taxpayer-funded agency that was established in the New Deal. It hands out tens of billions of dollars in financing every year to American businesses, ostensibly to help small firms get their foot in the door when it comes to international trade. But in reality, Ex-Im primarily benefits the wealthy and the well-connected, while harming everyone else.
{mosads}It’s corporate welfare, plain and simple. The facts speak for themselves.
Although the bank claims to help small businesses, the overwhelming majority of its money goes to multinational corporations with multimillion dollar profit margins. Big businesses benefit from between 75 and 80% of the bank’s financing, depending on the year. In fact, about two-thirds of its money went to only 10 big businesses in 2013, and one big business got a staggering 30%.
This sweet deal for big business is a raw deal for the rest of us. First and foremost: The bank wastes billions of taxpayer dollars. Although it’s supposed to be self-sustaining, Ex-Im has a long history of losing our hard-earned money. The federal government doesn’t expect this to change, either—the Congressional Budget Office estimates the bank will lose a further $2 billion over the next decade.
That’s not the only way we lose. When a company benefits from Ex-Im funding, it simultaneously gets an unfair advantage over its competitors. This inevitably leads to job losses at companies that can’t compete with the taxpayer-backed lucky few. Domestic airlines, for instance, lost roughly, 7,500 jobs when the Export-Import Bank helped sell American-made airplanes to foreign companies.
This points to a simple conclusion: The federal government can’t pick the economy’s winners without also picking losers. And considering that Ex-Im only supports 2% of America’s exporters, there are tens or even hundreds of thousands of losers among the remaining 98%.
Rarely will you see a federal agency that so blatantly enriches the few at the expense of the many. Those lucky few will also go to great lengths to protect their unfair advantage. Last summer, a small group of principled lawmakers forced Congress to temporarily block the bank’s reauthorization. They argued, rightly so, that federal lawmakers shouldn’t force the American taxpayer to subsidize private profits at public expense.
The bank’s beneficiaries pulled out all the stops to resurrect the agency. Companies and trade associations alike boosted their lobbying budgets by tens of millions of dollars in a desperate attempt to convince Congress to keep the taxpayer money flowing. Some even threatened to ship jobs overseas if the taxpayer didn’t pony up. The combination of hand shaking and scare tactics eventually worked, with both parties voting to reauthorize the bank after a half-year hiatus.

Those same lobbyists are now descending on D.C. for the Export-Import Bank’s annual conference on April 7. This time, they want Congress to confirm President Obama’s appointee to the bank’s board of directors. Without another board member, the bank can’t approve transactions over $10 million—meaning big businesses won’t be able to gouge the American taxpayer like they have for decades.
Congress should stand strong and refuse to let the Ex-Im Bank get back to business as usual. Corporate welfare has been rampant in Washington, D.C. for far too long – we also see it in health care, defense, agriculture, and basically every aspect of federal policy. Special interests run the city, enriching themselves and their friends at everyone else’s expense. Stopping them, starting with the Export-Import Bank, is the best way to restore Americans’ trust in their own government.

Gardner is vice president of policy at Americans for Prosperity.


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