Ex-Im Basically Benefits Just a Few States, While Taxpayers Everywhere Bear the Risks

by Veronique de Rugy

The map displayed below shows why the Ex-Im Bank’s nickname is “Boeing Bank” — and why it’s a grossly unfair redistribution of resources from all 50 states to just a few.

The map is based on data from the Export-Import Bank’s congressional map tool, which breaks down all transactions by state. The data displayed here is from FY 2007 to FY 2014 and includes all Ex-Im Bank disbursements for each state along with the proportion of small business transactions reported by the bank. Basically, it shows where Ex-Im money is flowing:

As you can see on the map, Washington State receives a massive 43.6 percent of all Ex-Im Bank disbursements from 2007 to 2014. Washington is the home of Boeing, one of Ex-Im Bank’s biggest beneficiaries, but the sheer concentration of benefits is nonetheless startling. Much larger states Texas and California only pulled in 10.5 percent and 8.8 percent of total Ex-Im Bank disbursements, respectively.

While businesses in most states barely benefit from the Ex-Im Bank at all, their taxpayers are just as exposed to Ex-Im Bank liabilities as taxpayers in states that receive the most Ex-Im backing.

On the Mercatus website you will find another map that displays the impact of Ex-Im Bank financing had on each state as a percentage of that state’s total exports over the same period of time.

The pattern is the same as the state shares of total benefits: Washington State is again the big winner, with an incredible 22.67 percent of state exports backed by the Ex-Im Bank since 2007. The state percentages drop off quickly from there: While almost 4 percent of Wisconsin’s exports and about 3.5 percent of Massachusetts’s exports were backed by the Ex-Im Bank, the Ex-Im Bank supported less than 2 percent of the exports of 41 states for the same time period. 

Now, why would lawmakers in states other than Washington State continue to support a program that clearing doesn’t benefit their constituents nearly as much as it does people in a select few states?

I offered an explanation in my Washington Examiner piece last week:

For one, politicians are pressured by an army of lobbyists representing powerful companies who are committed to protect their perks even if it hurts everyone else. But politicians are not exactly shrinking violets, here. They like being able to point to the small businesses and American jobs that they “support” through the Ex-Im Bank.

What is much harder is to point to the millions of victims of the Ex-Im Bank. Taxpayers, for instance, bear a massive $140 billion exposure so that giant corporations like Boeing and General Electric can make a little more profit each year. Should the bank’s portfolio go south, normal people like you and I will be on the hook.

Then there’s the economic distortions. Consumers face higher prices for airline travel, for instance, because the bank heavily subsidizes the foreign purchase of aircraft. Unsubsidized companies are subjected to an unleveled playing field. Because Ex-Im artificially lowers subsidized competitors’ financing costs, unsubsidized firms get crowded out of capital markets and find it hard to expand and maintain employment. If they fail, they won’t have the convenient assurance of a de facto taxpayer bailout like Boeing does.

Since more than 98 percent of all U.S. exports receive no assistance from Ex-Im, this means the vast majority of Americans are victims who bear the costs of political privileges for a tiny number of politically-connected firms.

Concentrated benefits and diffused costs mean that companies that benefit from the program are very motivated to fight for their perks, while the victims find it hard to organize or even determine that they’re being hurt.

The good news is that, in some cases, consumers and victims do end up winning against interest groups and unscrupulous lawmakers (as we’ve seen in the case of Uber and Lyft in Virginia). Hopefully this will happen with the Ex-Im Bank.