Great leaders make the right decisions, even when they are inconvenient. Serious policy analysts understand that not reauthorizing the New Deal-era corporate welfare program known as the Export-Import Bank is good economics. Leaders in Congress should let the government bank’s charter expire.
It is also good politics. Ohioans and Americans in general are tired of the toxic alliance between big business and big government. Whether through the Occupy Wall Street or the Tea Party movements, more people are expressing opposition to noxious cronyism, of which the Ex-Im Bank is the epitome. Americans simply will not stand for it anymore.
The Ex-Im Bank uses its special borrowing privileges with the Treasury Department to finance foreign purchases from a chosen few U.S. exporters. It provides taxpayer-backed loans, insurance, and loan guarantees for foreign companies, like Air China, to buy products from select U.S. exporters, like Boeing. In other words, it picks winners and losers by manipulating credit markets with below-market lending.
The program's cheerleaders, like beneficiary lobbyists and the Chamber of Commerce, claim it is critical to sustain exports. Economists disagree. Export-subsidy schemes like Ex-Im Bank have a negligible effect on national trade.
The data are clear. Ex-Im Bank backs less than 2 percent of total U.S. exports and less than 1 percent of small business exports each year. More than 60 percent of its activities benefit a handful of politically connected firms.
In Ohio, Ex-Im Bank is even more insignificant. It backed only 0.73 percent of all exports and less than 0.4 percent of small business exports from 2007 to 2014. Don’t buy the spin: Most of Ex-Im Banks’s benefits in Ohio only benefit General Electric subsidiaries at the expense of everyone else.
The Ex-Im Bank is a fat treat for General Electric in Ohio, but it hurts average citizens in the Buckeye State.
Consumers in Ohio wind up paying higher final prices for Ex-Im Bank’s subsidized goods. Workers in unsubsidized Ohio companies may find their hours reduced, raises dampened, or their jobs threatened because of Ex-Im Bank. Small business owners in Ohio can attract less capital because Ex-Im Bank gave their competitors an unfair government boost. All taxpayers bear the outlandish $140 billion in risk that rightfully belongs to subsidized firms.
There are no grounds to claim that closing Ex-Im Bank would be catastrophic for exports or small businesses in Ohio or nationwide. Rather, it would end political privilege, encourage firms to compete on their merits, and ensure that corporations – not taxpayers – bear their own market risks.
By opposing the Ex-Im Bank’s reauthorization, leaders in Congress would firmly express their loyalty to average Americans and businesses and lead the country toward a fairer, less corporatist future.