A few weeks ago, the Export-Import Bank asked for comments on the terrible idea of using its subsidies domestically. I won’t bore you with all the ways this would be making a bad corporate-welfare program even worse. If you are interested you can read my submission here. I will just note that this idea is the kind of policy that irrelevant and stagnant agencies come up with when they are struggling to do what they are supposed to do in the first place and aren’t doing. This is also what happens when politicians refuse to admit that an agency needs to go bye-bye.
As a reminder, the argument for bringing back Ex-Im was that it was terribly missed and that businesses would be booming as soon as it was reauthorized. Really? My assessment on that front is the following:
While the country was in the early stages of the pandemic in 2020, Ex-Im deployed new lending programs and lifted some restrictions in existing programs, purportedly to allow more deals to go through during hard times. You would think that such an international crisis would increase the demand for cheaper financing. You’d be wrong.
While a few large companies that already had plenty of access to capital benefited, the number of deals remained low. As a result, Ex-Im’s footprint has been steadily declining. According to Ex-Im data, its portfolio of loans and guarantees dropped from $54.7 billion in 2019 to $46.9 billion in 2020 and finally to $41.3 billion in 2021. This is less than one-third of the institution’s $135 billion financing capacity. . . .
Meanwhile, Ex-Im’s support for small business has been declining since the Bank was fully restored in 2019, dropping from $2.3 billion to $2.1 billion to only $1.6 billion in 2021. In 2021, Ex-Im’s financing for women- and minority-owned businesses was only $361 million. That’s less than half of where it stood 10 years ago, not even adjusting for inflation.
By the way, I am not complaining. The less it does, the less it distorts markets and subsidizes big companies.
The other argument was that Ex-Im could be a weapon against China — as if emulating China’s anti-market policies is the way to go. On that front, Ex-Im is thankfully underperforming, too:
Then there’s Ex-Im’s “Program on China and Transformational Exports,” which Congress inserted into the 2019 reauthorization to spur strategic investments designed to counter China’s global economic influence. Last year, the program delivered only $141 million — a tiny fraction of the $27 billion target that Ex-Im is supposed to hit by the end of 2026 . . .
Faced with this record of underachievement, the Biden administration could have put an end to the charade once and for all. Instead, it asked the agency to investigate financing investments within the United States, rather than merely abroad.
Hence, the request for comments, which provides us with a nice look into how corporations lobby for government handouts. A look at the submitted comments reveals that with the exception of a comment by Kate DeAngelis of Friends of the Earth and one from me, all the other 23 or so submissions were from large companies making the case that more government subsidies would be awesome. Here are some of my favorite examples.
First, my old friends in the LNG industry did not disappoint. They were first in line asking for subsidies. For a reminder of how entitled those guys are and the extent to their efforts to get government welfare, see my writing with DeAngelis and my various blog posts on how the big players in the industry were part of the Greensill fiasco. (DeAngelis does a nice job recapping the whole gory story in her submission.)
Then you have a 79-page PowerPoint submission by the $800 million Spanish power-electronics company named Ingeteam. It is an enormous company with no problem accessing capital. It has a presence in 24 countries, including in the U.S. Oh, and apparently during the last global financial crisis, it was so flushed, it invested in Milwaukee. That raises the question: Considering their success, why should we subsidize them?
A U.S. solar-panel manufacturer that claims that the lack of subsidies in this extremely liquid market is tough on them. It brings no evidence to their claims and fails to show how the subsidies would help. However, it does note that it welcomes the opportunity to double-dip by adding this subsidy to other handouts from other parts of the government. But it has no comments on the hypothetical parameters that Ex-Im laid out. I guess anything will do as long as it results in more corporate welfare.
Then, you have submissions from the export-subsidy consultant class. They are set to benefit when companies hire them to help draft their request for subsidies to the agency. More subsidies means more business for them.
There is so much more, including a submission from NAM and other pro-corporate welfare trade groups.
The bottom line is that when it comes to cronyism, taxpayers, unsubsidized companies that will have to compete against subsidized firms, and other unseen victims of corporate welfare have no voice in the process. Meanwhile, large interest groups present often meritless arguments for why this handout is a great idea.