News Column

EDITORIAL: Let this dinosaur die

May 19, 2014

The Augusta Chronicle, Ga.

May 19--Government agencies, bureaus and departments whose services are no longer needed tend to hang around too long. Bureaucracies, once in place, are difficult to remove.

The task becomes far easier when the agency has an expiration date.

The U.S. Export-Import Bank is such an agency. And lawmakers should let its Sept. 30 expiration date pass without a reauthorization.

This Depression-era relic that most taxpayers have never heard of uses their money to secure financing for favored corporations and foreign governments under the aegis of "facilitating" U.S. exports.

Like most New Deal-era machinations, the Export-Import Bank's time has come and gone.

Global trade is no longer the exotic and tumultuous prospect it was when President Roosevelt created Ex-Im to finance trade with the Soviet Union in 1934. These days, any major American corporation worth its salt has been doing business overseas without assistance for decades. And thanks to e-commerce, even small businesses are exporting their wares overseas.

So what does Ex-Im do exactly? If you ask Diane Katz, the Heritage Foundation's regulatory policy fellow, Ex-Im is "a conduit for corporate welfare beset by unreliable risk management, inefficiency and cronyism."

That assessment is backed up by a review of its annual report. Ex-Im's biggest customers are multinational U.S. corporations such as Bechtel, Boeing, Caterpillar and General Electric -- the kinds of "exporters" most would be shocked to learn need taxpayer-funded assistance.

Ex-Im provided subsidy assistance to 2.2 percent of U.S. exports last year, which tells us that nearly 98 percent got by just fine without special treatment.

And if the bank's mission is to help broker deals in high-risk regions private investors fear to tread, why does 85 percent of Ex-Im's business go to stable regions of North America, Europe and Asia?

Perhaps the larger question is: Why are taxpayers on the hook for deals the private sector deems too risky?

Ex-Im in that respect sounds an awful lot like failed mortgage lender Fannie Mae, another off-budget government lending agency immune to Cabinet-level oversight.

Critics say scrapping the bank would be a blow to U.S. companies that rely on Ex-Im financing.

Excuse us if we're a tad skeptical that Fortune 500 companies would suffer irreparable harm if Ex-Im's charter were allowed to expire. These aren't mom-and-pop businesses.

And it wouldn't matter if they were -- the government shouldn't be in the business of playing banker with taxpayer-subsidized loans, guarantees and insurance.

To see what happens when it does, look at Ex-Im's biggest customer, Boeing, the world's largest aerospace company (market capitalization: $91 billion). While Boeing benefitted from $48 billion worth of deals during the past five years, another American company, Delta Air Lines, was harmed because it was unable to buy Boeing planes under the same generous credit terms that foreign competitors could under Ex-Im financing.

As with most forms of corporate welfare, Ex-Im's spoils tend to go to the companies with the most lobbyists and biggest government relations budgets. You can be assured Big Business lobbyists are working overtime to ensure the spigot to the government-finance hose isn't turned off.

If our elected officials were truly committed to bolstering America's competitiveness in global trade, they would eschew corporate welfare for a reduction in export tax and regulatory barriers -- starting with Dodd-Frank regulations -- and reduce the corporate income tax to encourage U.S. companies to repatriate their overseas profits.

Send a message to lawmakers that whatever good Ex-Im does is simply not worth the risk to taxpayers. If the private sector can handle 98 percent of the $2.2-trillion export-finance market, it can surely handle 2 percent more.

Any way you slice it, Ex-Im is one dinosaur that should be allowed to go extinct.


(c)2014 The Augusta Chronicle (Augusta, Ga.)

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Source: Augusta Chronicle (GA)

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