At the end of July, Congress let the charter of the Export-Import Bank expire. While the bank’s continued existence has historically been justified by the loans it provides to American exporters, it became apparent it was no longer succeeding in this role. In recent years numerous reports have uncovered story after story tying the Bank to waste, fraud, and abuse.
While ending this institution of crony capitalism should have been a no-brainer, some in Congress are intent on reviving the bank and plan to tie reauthorization to must-pass highway funding legislation. If Congress is serious about responsible spending of taxpayer dollars, it should let Ex-Im stay dead.
The bank was first created in 1934 to finance American exports overseas. At the time, it served an important function – the average tariff on imports around the world sat almost 47 percent. But today, it is less than five percent as the world has shifted toward more open trade. The global inequities that once served as a justification for Ex-Im no longer exist. In fact, there are over 400 free trade agreements in effect across the world and Congress has just passed legislation providing guidelines for the administration to negotiate new agreements with trade partners. With these ever diminishing trade barriers, it has become easier and easier for US business large and small to compete.
While supporters of the bank try to tie Ex-Im to American competitiveness, in reality it finances a small fraction of US trade, and a miniscule percentage of small businesses. Instead, it overwhelmingly benefits a select few super-corporations and in recent years over 60 percent of its operations have benefited just ten corporations.
According to statistics from the White House, between 2009 and 2014 the Ex-Im Bank supported just 0.42% of exporters, 0.28% of small businesses and 1.9% of total exports. In that same period, Ex-Im has become ridden with scandals resulting in 85 criminal indictments, 48 criminal judgments, and over $250 million in fines, restitution, and forfeiture.
Even worse, many of the loans the bank finances do not appear to be in the best interests of the American people. In 2014, the bank provided $15 million in loans so a Caterpillar subsidiary could buy equipment from Caterpillar. In 2012, Ex-Im provided nearly $5 billion in loans to the world’s largest oil company, state-owned Saudi Aramco. The bank has also financed sales between two Chinese state-owned companies and to a foreign energy company accused of displacing the indigenous populace.
Given this abysmal record, it is unsurprising that opposition to the bank can be found from politicians across the ideological spectrum. Liberals and conservatives, like Rep. Jim Jordan (R-Ohio) and former Rep. Dennis Kucinich (D-Ohio) agree the bank is beyond saving. Similarly, presidential candidates from both sides of the aisle, like Ted Cruz and Bernie Sanders oppose reauthorization. Given this depth of opposition Ex-Im is clearly not a matter of partisan politics, but is about responsible use of taxpayer dollars.
The fact is, the Ex-Im Bank is outdated. While the bank may have once played an important role, today it exists as a symbol of Washington cronyism and finances outrageous sales that are not in the best interest of the American people. Regardless of what legislation it is tied to, Congress must not reauthorize the Ex-Im Bank.