Politicians are hoarders. Instead of filling up their homes with junk and refusing to throw any of it away, they surround themselves with bloated government programs and come up with excuses to not get rid of any of them. Proposing “reform” is one of their favorite tactics to save rotting government programs that should be set out by the curb.
Rep. Stephen Fincher (R-Tenn.) is the latest example of a politician exploiting the popular ideas of “accountability” and “transparency” to protect a government program that should have been terminated decades ago. Fincher and 57 Republican co-sponsors introduced “reform” legislation that would reauthorize the Export-Import Bank (Ex-Im)—created in 1934 to subsidize exports to the Soviet Union—through September 2019.
Last week, Fincher made the grossly misleading claim that “Since its inception, the Ex-Im Bank has assisted in advancing our exports and has been an American job creator, filling a critical gap in the market.” As research by the Government Accountability Office and others demonstrates, Ex-Im simply isn’t the job creator that it claims to be. The bank itself reported that only 16 percent of its beneficiaries were seeking to overcome limitations in private sector export financing. And in cases where the private sector didn’t think it was a good idea to finance a deal, why should taxpayers have backed it instead?
{mosads}The truth is that the bulk of Ex-Im’s activities benefit large, politically connected companies. Indeed, over 65 percent of Ex-IM Bank’s loan guarantee program benefits aerospace giant Boeing, which currently has a market cap of $106 billion. As Ex-Im critic Tim Carney notes, the company recently “announced $1.47 billion in fourth-quarter profits, 19 percent higher than last year, along with a record backlog of airplane orders that stretches eight years.” It certainly looks like Boeing should be able to meet its financing needs without help from taxpayers—as should its clients. In fact, several of them have come out and said so themselves.
Fincher also says that Ex-Im promotes exports and, hence economic growth. This, too, is misleading. Ex-Im Bank backs barely 2 percent of U.S. exports, which means that 98 percent of exports occur without it. Wouldn’t most of the exports the bank backed have happened anyway?
What Fincher fails to acknowledge are the many unseen victims of the bank. First, Ex-Im apologists claim that it returns money to Treasury, but the Congressional Budget Office projects that taxpayers will have to shoulder $2 billion in losses over the next decade. Even when there aren’t losses, it merely shows that the private sector could have handled the financing. Second, Ex-Im places the 99.96 percent of U.S. small businesses that it doesn’t subsidize at a competitive disadvantage because the subsidies artificially lower costs for privileged competitors. Indeed, the Cato Institute’s Dan Ikenson has shown that 189 industries are net losers due to Ex-Im’s subsidies.
Sadly, the privileges Ex-Im extends to the few come at the expense of countless American firms and their workers. Unsubsidized firms may see reduced revenues—and their employees may see their hours cut, their salaries stagnate, or their jobs simply vanish because their employers cannot compete on the uneven playing field created by the federal government.
But Americans never hear the darker side of the story because Ex-Im Bank and its corporate and political patrons willfully ignore it. And contrary to what Fincher would like you to believe, his so-called “reform” bill won’t create a happier ending. None of his proposed reforms address the bank’s fundamental flaw that it’s inherently redistributionist nature leads to the political picking of winners and losers. Instead, the Fincher bill would hire more bureaucrats to oversee Ex-Im Bank and require various government entities to issue reports, which would just add to the running stack that Congress already routinely ignores. Other provisions of the bill are merely reincarnations of “reform” included in the in the 2012 Ex-Im reauthorization bill. Together, they make for no real changes.
It is time for Congress to start cleaning up its house and agree to end programs that need to go away. Enough with the pretense of reform.
de Rugy is a senior research fellow with the Mercatus Center at George Mason University.