You can’t have your cake and eat it, too.
That’s the message Senator Richard Shelby (R., Ala.) is sending to corporate lobbyists supporting the U.S. Export-Import Bank, or “Ex-Im.” In successfully lobbying for the bank’s reauthorization last year, Ex-Im’s supporters claimed it was first and foremost about helping small businesses compete with foreign competitors. Now, Senator Shelby is putting that claim to the test.
First, some background. A relic of the New Deal, Ex-Im provides taxpayer-backed financing to foreign companies that buy American goods. With a current portfolio of $102 billion, it is the very definition of corporate welfare — financing private profit at taxpayer expense.
For decades, Ex-Im’s charter was consistently reauthorized with little, if any, objection. That began to change in recent years, as more people began to see the bank as the corporate slush fund that it’s always been. In 2013, for example, nearly two-thirds of the bank’s total financing supported just ten large corporations, while over 90 percent of its loan guarantees benefited just five. A small business bank, this is not.
Or take the fact that Ex-Im is riddled with corruption and graft. Between October 2007 and March 2014, there were 792 reported claims of fraud involving Ex-Im, while at least 47 people have been convicted of defrauding the bank during the last six years alone.
These are among the many reasons Congress allowed Ex-Im’s charter to expire last June — the first such expiration in the bank’s 82-year history.
Undeterred, the bank’s supporters redoubled their efforts, pushing the argument that small businesses would suffer without Ex-Im. Business groups made claims that “without Ex-Im, small businesses will lose out to their overseas competitors.” The claims echoed the bank’s own chairman and president, Fred Hochberg, who during the summer said, “The most important thing we do is that we support the small businesses.”
Helping small businesses was never really the motivation behind the campaign to reauthorize Ex-Im.
These misleading tactics ultimately prevailed, and in December the bank was reauthorized until 2019.
But there is a silver lining for taxpayers who are tired of corporate welfare. While the bank is currently open for business, it only has two of the three board members necessary to form a quorum. Without a quorum, the bank is unable to approve deals worth over $10 million, effectively limiting it to making deals more suited to small businesses.
The bank’s own data back this up. Last year — when it had a quorum — 89 percent of Ex-Im deals worth over $10 million went to big businesses, including Boeing, General Electric, and other Fortune 500 companies that have no business receiving taxpayer subsidies. Limiting the bank’s financial authority to $10 million forces the bank to focus more on smaller business deals.
This is where Senator Shelby comes in — and where he’s rightly taking a principled stand.
As chairman of the U.S. Senate Banking Committee, Senator Shelby controls the confirmation process for nominations to Ex-Im’s board. And thus far, he has refused to advance President Obama’s nominee, effectively limiting all Ex-Im deals to less than $10 million. As he noted last summer, Ex-Im’s “subsidies are more about corporate welfare than advancing our economy.”
One would think such a small-business focus would be fine with Ex-Im’s supporters. After all, they’re the ones who spent the last year arguing that’s what Ex-Im is all about. Now they have exactly what they asked for — a federal-export agency focused on small businesses.
But then again, helping small businesses was never really the motivation behind the campaign to reauthorize Ex-Im. It was merely a guise to reopen the federal spigot for billions of dollars in corporate welfare to some of the largest companies in the world — all at taxpayer expense. Those same companies and their lobbyists are now behind the scenes intensifying pressure on Senator Shelby and others to advance President Obama’s nominee to Ex-Im’s third board seat.
We applaud Senator Shelby’s principled stand on this issue and encourage him to continue it. Allowing Ex-Im to operate without a quorum is a modest, but important, check on a federal agency that has come to symbolize Washington’s culture of corporate welfare and corruption. Ex-Im’s supporters got their cake with the bank’s reauthorization — they can’t now eat it, too.