The Export-Import Bank of the United States has been around since 1934, supported by both political parties, with a mission to help provide financing for the sale of U.S. exports. Now, as part of its anti-everything mission, the political right wants to turn the routine reauthorization of Ex-Im into yet another cudgel with which to cripple the Obama presidency. Columnist George Will, once a Tory of somewhat independent views, calls it “Boeing’s Bank” and laments the losers it creates.
He quotes a Delta Air Lines executive saying that if Delta had received similar help, ” ‘it could have saved approximately $100 million a year in financing costs’ and could have used that money to hire more workers ‘or even purchase additional aircraft from Boeing.’ ” Or not. Much of that theoretical $100 million would likely have gone to added executive compensation. In 2010, Delta’s CEO received more than $8 million from the corporate treasury, 237 times the median workers pay. Delta would as likely have purchased from Airbus, rich in its own subsidies.
Delta’s argument is that it is being undercut on foreign routes by carriers, such as Air India, which bought Boeing airplanes with the help of Ex-Im financing. According to the Wall Street Journal, House Majority Leader Eric Cantor “views the bank’s activities as improper government interference into the private marketplace, putting taxpayers at risk. The U.S. government is ultimately on the hook for bank losses, though the bank consistently earns profits that are returned to U.S. taxpayers.”
Delta doesn’t complain when it receives huge stealth subsidies from the federal government, in the form of airport infrastructure, air-traffic control, choice airport slots, etc. (benefits that were never conferred on our once-great passenger train system). Meanwhile, it’s true that Boeing is Ex-Im’s biggest customer, but this is partly a result of the big-ticket items it sells and partly because so much of America’s export manufacturing base has been decimated. But Ex-Im helps far more than Boeing, including many small businesses. It provides financing that would not otherwise be available and has been a big part of the strong American export performance since the Great Recession. Ex-Im has provided $41 billion in support annually, double where it stood four years ago.
Will laments “an increasing mercantilist world.” Yet that is the reality, especially with China. And Ex-Im is hardly the place to start if we want to pare down destructive, winner-picking corporate welfare (fossil fuels and the Military Industrial Complex come quickly to mind). Ex-Im is one of the few effective tools the United States has to counter the mercantilism that has destroyed millions of American jobs. And after decades of safe, effective operations, “winding it down” will only ensure a further lack of American competitiveness.
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Today’s Econ Haiku:
Starbucks riding high
Who says there’s no second act?