In the little time she’s been in Congress, Senator Elizabeth Warren has made a name for herself as a populist who talks tough about Wall Street and other large corporations. But is she going to do more than just talk about it?
At the end of last week, Warren confirmed that she still supports the Ex-Im Bank — a government agency that hurts many U.S. employees of companies not lucky enough to benefit from it and consumers who face higher prices as a result of the subsidies, all for the sake of lining the pockets of the biggest corporations in the country. Here’s what her office told Bloomberg:
Senator Warren believes that the Export-Import Bank helps create American jobs and spur economic growth, but recognizes that there is room for improvement in the bank’s operations. She looks forward to reviewing re-authorization legislation if and when it is introduced.
Her position was confirmed when she turned down an invitation from the conservative group Heritage Action to talk about “ending the Export-Import Bank and the political favoritism it engenders.” But her misguided support for the Bank isn’t new. In 2012, she praised Fred Hochberg, the chairman of Ex-Im, repeating the canard that this agency focuses on helping American small businesses. Here’s some data for the senator:
Only 19 percent of the Bank’s activities benefits small businesses.
The Ex-Im Bank’s definition of a small business is a pretty big business — it includes firms with up to 1,500 employees earn up to $21 million in annual revenue.
In 2007 (the most recent year data is available), only 0.3 percent of all small business jobs& — as defined by Ex-Im — were supported by the bank.
Assuming that each Ex-Im small-business transaction went to a unique small business (it didn’t), only 0.04 percent of all small businesses were supported by Ex-Im that year.
Warren’s support for the Ex-Im Bank is totally inconsistent with her otherwise populist stands, and it’s hurting the people she represents.
The biggest Ex-Im beneficiaries are U.S. giant corporations like Boeing, GE, and Caterpillar and their very wealthy foreign buyers. These companies don’t need the bank, but they love it. It allows a select number of U.S. exporters to increase their profits and transfer onto taxpayers risk that the companies should be shouldering. The foreign companies love it because, while they do have access to capital without the bank, Ex-Im loans come much cheaper, giving them a U.S. government-sponsored edge over their competitors — including all their American competitors.
Meanwhile, the mega-banks that Warren always complains about are some of the biggest beneficiaries of Ex-Im. They get to extend billions of dollars in loans, collect large fees and interest rates, without shouldering most of the risk involved. This is exactly the kind of favoritism for Wall Street she says she upposes.
Meanwhile, workers in unsubsidized companies may find their hours reduced, raises dampened, or their jobs threatened because of the competition they face from subsidized Ex-Im companies. Does the senator know that small-business owners in Massachusetts have to compete with other “small businesses” next door that have received some working capital from Ex-Im? Does she know that roughly 7,500 jobs in the U.S. airlines industries have been lost because the U.S. subsidizes foreign airlines?
Ex-Im& isn’t for the little guys, it’s government assistance to big businesses and wealthy private lenders. In light of that, we should all — especially Senator Warren’s fans — take her populist rhetoric with a couple more grains of salt in the future.