Congress should kill the Export-Import Bank, a taxpayer-financed slush fund for crooks, cronies, and corporate flops. Rather than reauthorize this gold-plated boondoggle, Congress simply should do nothing. If so, the Ex-Im Bank will die of terminal inaction on June 30.
And what a well-deserved death that would be. As a new report details, this multibillion-dollar Pandora’s Bank teems with unaffordable horrors.
American Transparency/OpenTheBooks.com (on whose advisory board I serve) scrutinized $172 billion in Ex-Im Bank loans, guarantees, and transactions from Fiscal Year 2007 through FY 2014. Among this watchdog group’s discoveries:
‐The American taxpayers’ exposure to potential Ex-Im loan defaults has soared from $57 billion in 2007 to $112 billion in 2014 — a 96.5 percent increase. If the economy, which shrank 0.7 percent last quarter, contracts this quarter, America will be in recession. That would sink many of these borrowers and leave taxpayers on the hook. Bailout, anyone?
‐The Ex-Im Bank would be bad enough if it bestowed government favors on fledgling companies taking baby steps into international business. While some smaller firms get financing for trade deals, they are dwarfed by some of America’s biggest enterprises. Indeed, the ten largest exporters that use the Ex-Im Bank received $85.2 billion of its $172 billion in transactions since 2007. So, almost precisely half of Ex-Im Bank financing flowed into companies such as Bechtel, General Electric, and Westinghouse.
‐Some $60 billion, or nearly 35 percent, of Ex-Im Bank’s financing over this period went to Boeing, its No. 1 customer. While Boeing’s airplanes are splendid, this company is big enough to fly solo.
‐Caterpillar, Halliburton, and Schlumberger have pocketed roughly $3.5 billion in Ex-Im Bank subsidies since 2007. “All three admitted doing business in Iran through subsidiary businesses circumventing sanctions against Iran,” American Transparency chairman Adam Andrzejewski explained at Forbes.com. “After these transactions came to light in 2010, two of the three companies ended Iranian dealings.”
‐The biggest recipient of Ex-Im Bank’s import credits is Pemex, Mexico’s government-owned oil company. Pemex has a payroll of 138,000 workers and $415 billion in assets. Pemex does not need help from overburdened U.S. taxpayers. It should have held out its sombrero elsewhere, rather than take Ex-Im’s $7.2 billion.
The Republican Congress can strike a blow for free markets, rather than government-supported big business, by shutting down this luxurious trough.
‐Ex-Im Bank pumped $9.6 million into Solyndra in February 2011. Six months later, the California-based solar-panel manufacturer went bankrupt. Interestingly enough, Ex-Im backed a sale of solar panels to Belgium, a country better known for its chocolates than its sunshine.
‐With these huge sums of money sloshing around, it’s no surprise that the Ex-Im Bank is a magnet for grifters. Its inspector general currently is investigating as many as 40 different cases of fraud. Last April 22, an Ex-Im Bank loan specialist named Johnny Gutierrez pleaded guilty to taking $78,000 in bribes for recommending the loan applications of a company that received $25 million from Ex-Im Bank. It probably helped that Gutierrez covered up the fact that it defaulted on earlier loans. Former congressman William Jefferson (D., La.) was sentenced to 13 years in prison for corruption in 2009. He was caught with $90,000 cash hidden in his freezer. Federal officials accused Jefferson of taking this bribe to open doors at the Ex-Im Bank.
For years, Republicans should have taken a major stand against corporate welfare. Killing the Ex-Im Bank offers the GOP a perfect opportunity to do so. The Republican Congress can strike a blow for free markets, rather than government-supported big business, by shutting down this luxurious trough. Demanding that major corporations take their hands off the taxpayers’ money and fend for themselves will give Republicans badly needed credibility when it comes time to cut runaway entitlements and apply affluence tests to burgeoning poverty programs.
If Republicans fail to do this — as they have failed miserably to do with the ethanol mandate and other farm subsidies — they will confirm the Left’s perennial accusation that it’s the party of the rich, not the party of the people.