July 15, 2015
Heritage President Jim DeMint sent the following letter to small business leaders regarding the revival of the Export-Import Bank:
Dear Business Leader,
I’m writing to you on a topic that is little known outside of our nation’s Capital—the Export-Import Bank (or Ex-Im, for short). Originally created under FDR to spur trade with the Soviet Union, Ex-Im has outlived its original purpose and instead functions as a source of corporate welfare for some of America’s biggest conglomerates. As a local business leader, it is important for you to know what is at stake in this fight against the Export-Import Bank.
Before I came to Washington to serve as a Congressman and then a Senator, I ran a little marketing agency in my home town of Greenville, South Carolina. I was proud to be active in the local Chamber of Commerce. I got to see that most small business owners, like me, had the same priorities: a little relief from punishing taxes and dizzying regulations, and a fair shot at success. My friends were more interested in running a good business, under fair laws, than getting any special favors.
That makes the prospect of big corporations benefitting from programs like the Export-Import Bank— while pretending that it helps the little guy—even more frustrating to me.
The Export-Import Bank is unknown to most Americans, probably because it doesn’t help most Americans. It’s a government program that funnels our tax dollars into loans, loan guarantees, and insurance for foreign companies and governments so that large corporations such as Boeing and General Electric can score more business overseas.
Ex-Im has a history of mismanagement and fraud, but the big players who benefit from taxpayer subsidies are trying to keep Ex-Im going by telling Congress that the program helps small businesses.
On the contrary, for every foreign company that gets discount financing from Ex-Im there is an American company that must compete without such subsidies.
I want to set the record straight: only about 20 percent of Ex-Im financing benefits small businesses. The other 80 percent benefits larger corporations. Even then, Ex-Im uses an expansive definition for “small,” which includes companies with up to 1,500 workers or even $21.5 million in annual revenue. A company with over a thousand employees does not seem small to me.
During a Senate Banking Committee hearing on the Export-Import Bank, when asked whether the quota of small businesses that Ex-Im is required to help should be raised, John Murphy, Senior Vice President for International Policy for the U.S. Chamber of Commerce, actually opposed the suggestion. He even argued that “[i]n many cases, they can find commercial banking services.”
It is understandable that Boeing, General Electric, Bechtel, and Caterpillar take advantage of the cheap export financing. The federal government has provided an instrument for these large corporations to obtain a competitive advantage. However, favoritism for a few corporations runs counter to free enterprise.
With all of that said, after a long and arduous fight waged by The Heritage Foundation and others, Ex-Im expired on June 30. However, powers in Washington are looking to restore the charter of the bank by attaching reauthorization to legislation such as funding for the Highway Trust Fund. It’s bad enough that some members of Congress want to revive the unnecessary subsidies. But piggybacking Ex-Im reauthorization on a wholly unrelated measure is also inappropriate. If you agree that we should not be reauthorizing the cronyist Ex-Im Bank, I hope that you will discuss it with the members of your local Chamber.
If you agree that America should be a land of opportunity for all and favoritism to none, I hope you consider working with us at The Heritage Foundation in the fight against Ex-Im. Gerren McHam in our Policy Promotion Department is heading our fight and would be pleased to work with you on this. You can reach him at email@example.com.
President, The Heritage Foundation