The Export-Import Bank (Ex-Im Bank) Provides Taxpayer Subsidies Primarily to Multinational Corporations
More than 80 percent of the bank’s financing benefits major firms, including the Boeing Company (market capitalization exceeding $91 billion). In the past five years, the aviation giant has profited from 197 Ex-Im deals totaling $48 billion. In fiscal year 2013 alone, about 66 percent of Ex-Im loan guarantees benefited Boeing.
According to Mercatus Center economist Veronique de Rugy, the Ex-Im Bank provides export financing for just 0.009 percent of America’s small businesses. The proportion of smaller businesses that do receive aid is artificially inflated by the bank’s expansive definition of “small,” which includes firms with as many as 1,500 workers and companies with revenues of up to $21.5 million annually.
Ten companies benefited from 75 percent of the Ex-Im subsidies in FY 2013. Along with Boeing, these major beneficiaries included General Electric (valued at $267 billion), Bechtel Corporation (2013 revenues of $39.4 billion), and Caterpillar Inc. (with 2013 sales and revenues of $55 billion).
The vast majority of exporters—98 percent—do not receive assistance from the Ex-Im Bank. There is no shortage of private financing available, particularly for multinational corporations that could finance their own exports.
Ex-Im Subsidies Threaten U.S. Jobs
The bank funnels billions of taxpayer dollars each year to overseas businesses for the purchase of American products. These subsidies put U.S. firms at a competitive disadvantage. Ex-Im financing of coal mining in Colombia, copper excavation in Mexico, and airplanes for India has been identified as contributing to job losses among domestic companies.
Ex-Im officials fail to properly consider the impacts of export subsidies on American workers and the businesses that employ them. The Ex-Im Inspector General concluded that the bank’s analyses ignored economic impacts contemplated by the Ex-Im charter and omitted relevant data.
Ex-Im Puts Taxpayers at Risk
All Ex-Im financing is backed by the “full faith and credit” of the U.S. government. Taxpayer exposure will exceed $140 billion by the end of FY 2014.
The Congressional Budget Office recently reported that Ex-Im will operate at a deficit of $2 billion in the next decade (in addition to the bank’s operating costs).
The Inspector General has concluded that the bank lacks sufficient policies to prevent waste, fraud and abuse, and has inadequate risk management policies and recordkeeping.
Ex-Im Benefits Unfriendly Nations
Ex-Im subsidies benefit China, Venezuela, Cuba, and Russia. State-owned foreign airlines have received $16 billion in subsidized financing since 2009.