When powerful special interests get their way, the government grows to flex its power on behalf of its favorite cronies.
Business lobbyists try to mislead Americans into supporting corporate welfare by presenting plum programs as beneficial to the public welfare. They spin promises of job creation, small business support and economic growth.
But Americans shouldn't fall for these illusions. To see who benefits from the U.S. Export-Import Bank and the potential reauthorization of its charter, all you need to do is follow the money.
Contrary to the pro-Ex-Im Bank crowd's message, economists have repeatedly shown that export subsidies never boost the net level of exports. Rather, these subsidies redistribute sales away from unsubsidized exporters and toward those who curry favor with the right bureaucrats.
In the case of Ex-Im Bank, the winners are obvious. While the bank only backs 1.9 percent of all U.S. exports, a stunning 76 percent of Ex-Im Bank's portfolio directly benefits fewer than 10 massive multinational corporations, including Boeing, General Electric and Caterpillar. Indeed, the bank earned its D.C. nickname: "Boeing's Bank."
But these companies, the Chamber of Commerce and National Association of Manufacturers try to defend the subsidies. They threaten that if Uncle Sam stops subsidizing profits, American jobs will be lost, small businesses will tank and American exports will come to a grinding halt.
This is nonsense. Let's look at the data:
Corporate Ex-Im Bank supporters warn that millions of American jobs could be destroyed. The bank itself claims to have supported 1.2 million jobs over the past five years. Yet it's worth noting that the federal government's nonpartisan Government Accountability Office disputes this figure and the sloppy methodology that produced it.
But even if one assumes that Ex-Im Bank's questionable figure is accurate, this only amounts to some 2 percent of all export-related employment and a measly 0.01 percent of all U.S. jobs. Most of these jobs come from the largest corporate beneficiaries like Boeing and Caterpillar.
Corporate Ex-Im Bank supporters also warn that small business will be devastated without the bank's assistance. Some advocates claim that 90 percent of all Ex-Im Bank transactions go to small businesses -- but this is misleading.
Less than 20 percent of all Ex-Im Bank funding goes to "small" business, which the bank defines much more broadly than all other government bodies. To Ex-Im Bank, a company with 1,500 employees and $21 million annual revenues is still considered "small."
The more relevant comparison is how many small businesses in the broader economy benefit from Ex-Im Bank. Data from the U.S. Census Bureau show that Ex-Im Bank backs less than 0.3 percent of all small business jobs and less than 0.04 percent of all small business establishments.
Lobbyists try to conceal the facts, but there is no hiding the truth: The business of Ex-Im Bank is big business.
Finally, Ex-Im Bank defenders claim that it is necessary to promote U.S. competitiveness. They would be more honest to say that the bank is necessary to promote the profits of a handful of well-connected corporations.
Ex-Im Bank manipulates credit markets to tilt the playing field in the favor of a privileged few businesses. As these favored businesses attract more customers -- thanks in part to their lower costs -- unsubsidized firms therefore find it harder to access capital, expand sales, and maintain employment.
The justifications for extending the Export-Import Bank's charter keep changing, but the winners and losers remain the same. Ex-Im Bank is a corporate welfare program that benefits manufacturing conglomerates involved with fewer than two percent of exports at the cost of everyone involved with the other 98 percent.