In 1934, with American business facing competition from foreign companies who raked in subsidies from their respective governments, President Franklin Delano Roosevelt issued an Executive Order establishing the Export-Import (Ex-Im) Bank.
FDR intended the Ex-Im Bank to make American companies more competitive by providing them with loans in the hopes of leveling the playing field with their foreign competitors.
|President Obama leaves the podium after speaking at the Export-Import Bank's annual conference in 2010.
For years, Ex-Im played its proper role, but as time passed, it grew, eventually becoming a bloated government agency with no oversight; a classic example of corporate welfare. Today, the bank is shrouded in controversy and is plagued by poor judgment. Ex-Im has a history of subsidizing corrupt and now-bankrupt companies such as Enron and Solyndra.
Even worse than the Bank’s atrocious business deals is the harm that Ex-Im does to American jobs. It a clear contradiction of its founding principles, the Ex-Im Bank gives loan guarantees to foreign companies that are in direct competition with American businesses. As a result, U.S. companies are forced out of business or have to scale back their services, ultimately causing Americans to lose their jobs.
The most prominent example is Export-Import’s subsidization of foreign airlines, a move that has cost America’s airline industry as many as 7,500 jobs. The bank gives loans to foreign airlines that purchase Boeing planes, allowing them to save roughly $5 million per wide body aircraft. By law, American airlines are excluded from obtaining these same loan guarantees, meaning that foreign airlines receive significantly cheaper planes and an unfair competitive advantage.
Ex-Im’s chief concern now appears to use tax dollars and government power to pick winners and losers in business. It provides financial backing to companies at the expense of others. Usually, the companies that benefit most are the ones with powerful lobbyists.
Boeing happens to have some of the best lobbyists in the nation’s capital and as columnist Howard Rich noted, the company “benefited from $8.4 billion in Ex-Im loans in 2009, $6.4 billion in 2010 and $11.4 billion in 2011 — gobbling up the overwhelming majority of the bank’s lending capacity.”
Members of Congress should eliminate the Ex-Im Bank. If Congress doesn’t have the courage to eliminate Ex-Im, it should pass legislation that would make the bank’s business practices more transparent by disclosing its activities and opening its meetings to the public.
Doing so would allow closer scrutiny of investments, hopefully reducing the number of bad loans along the way. Moreover, legislation should force Ex-Im to abide by its congressional mandate, which reasonably says that the bank must consider the negative impact of its loans on American workers before it doles out assistance. And now is a better time than ever to pass such reforms since Congress is currently debating reauthorizing the Ex-Im Bank’s charter.
Congress needs to act. The bank should be reformed so that America’s interests come first. Since other countries give out loans to boost their respective domestic companies, it is reasonable to argue that the federal government should have the same opportunity to help American businesses.
However, the practice of giving billion-dollar handouts to foreign companies at the expense of American industry must come to an end. Ex-Im should be restored to a bank of more modest means that protects American companies, like it did when it was first created by President Roosevelt, not the behemoth that picks winner and losers, punishing American employers along the way.
Drew Johnson is a senior fellow at the Taxpayers Protection Alliance, a nonpartisan, nonprofit educational organization dedicated to a smaller, more responsible government. Read more reports from Drew Johnson — Click Here Now.
© 2015 Newsmax. All rights reserved.