The Export-Import Bank’s charter expired on June 30. What is commonly known as “Boeing’s Bank” is headed toward Washington’s trash bin.
When Congress returns, it could revive Ex-Im, which primarily subsidizes big business. But a proper burial for what candidate Barack Obama called “corporate welfare” would save Americans money, reduce economic injustice, and promote economic growth.
ExIm exists to borrow at government rates to provide credit at less than market rates for select exporters, mostly corporate behemoths. The bank claims to be friendly to small business, but cherchez the money: it goes to Big Business.
According to Veronique de Rugy of the Mercatus Center, the bank subsidized $66.7 billion in sales by Boeing between 2007 and 2013. In 2013, the top ten ExIm beneficiaries accounted for two-thirds of the bank’s total activities.
The bank charges fees and interest and claims to make a “profit”—more than $1.6 billion since 2008. But economists Jason Delisle and Christopher Papagianis explained that the bank’s “profits are almost surely an accounting illusion.” Most important, there is no calculation for market risk. CBO figures real losses over the coming decade are likely to exceed $2 billion.
Taxpayers also could get hit with a big default bill. Total outstanding credit is $110 billion, yet the agency’s own inspector general warned that bank practices create the risk of “severe portfolio losses.”
The agency is supposed to create jobs by throwing cheap money at purchasers of American products. However, the bank backs only about two percent of U.S. exports. There is plenty of private money available for such deals.