Shuttering Ex-Im Bank Good for Arizona

Letting the New Deal-era corporate welfare program known as the Export-Import Bank expire is just good economics for Arizonans. There are plenty of bad arguments to reauthorize the Ex-Im Bank's charter, but none are more misleading than the claim that this government bank serves small businesses and that, without it, exports in Arizona would collapse.

More than 80 percent of the bank's portfolio primarily benefits huge corporations. This leaves less than 20 percent of Ex-Im Bank's portfolio for small firms.

But even this is misleading, since the Ex-Im Bank's definition of a "small business" isn't exactly small. However, Ex-Im Bank defines small businesses as companies with up to 1,500 employees or annual revenue up to $21 million.

For example, the Ex-Im Bank considers Arizona company Competitive Engineering Inc. Global to be a small business. While public records suggest the firm employs a staff of between 100 and 249, it reportedly earns annual revenue of over $17 million and has offices worldwide. CEI Global should be proud of its success, but it is not "small" to most Americans and could be just as prosperous without the Ex-Im Bank.

Even with this definition, the Ex-Im Bank benefits a minuscule percentage of small businesses.

Data from the Census Bureau's Statistics of U.S. Small Businesses dataset and from the Ex-Im Bank's records show only 0.3 percent of all small-business jobs received assistance from the bank in 2007, the most recent year for which the full Census dataset is available.

Let that sink in: Over 99.6 percent of American small-business jobs exist without any Ex-Im Bank assistance.

What about the idea that without the Ex-Im Bank, Arizona exports would be hurt? It is fear-mongering. First, there isn't much to lose. From 2007 to 2014, the bank's data show that Arizona received 0.3 percent of all Ex-Im Bank financing.

Washington, home to Boeing, received 47 percent of total Ex-Im Bank disbursements over that same time.

Also, less than 0.5 percent of total Arizona exports were backed by the Ex-Im Bank over the past seven years. Needless to say, the sky isn't going to fall on Arizona exporters without the Ex-Im Bank.

Shutting it down would restore some fairness in the state. When Ex-Im Bank subsidizes an Arizona company, it comes at the expense of the vast swath of other businesses and their employees. When a company or its customers get a cheap loan from the bank, they enjoy lower costs and a clear edge over the competition. Unsubsidized firms may attract less capital as a result, incur higher costs, cut back on hiring and grow less than they would have on a level playing field.

Subsidized businesses should not matter more than unsubsidized firms in the Grand Canyon State merely because they happen to have friends in Washington. Arizonans should ask their lawmakers why they support a program that exposes them to so much risk mostly for the benefit of Washington state.