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Reflections


PA Congressmen Back Corporate Welfare

by Jerry Shenk
 

US Representatives Ryan Costello and Charlie Dent want to revive the Export-Import Bank.

Along with only forty other Republicans (of 247) and 170 Democrats, Costello and Dent signed a House discharge petition to force a vote on reauthorizing one of America's worst examples of corporate welfare. The signers dissemble with talking points like "saving jobs," but the Ex-Im Bank's only function — ever — was to promote the welfare of a relatively few politically-connected corporations at the expense of smaller competitors and workers, while shifting lending risks — loss absorption -- from large banks to American taxpayers.

Until last summer's expiration of the Bank's charter, sixty-four percent of Ex-Im financing benefited ten large corporations. Forty percent benefited Boeing alone. Top beneficiaries among foreign-buyers included many government-owned "enterprises" such as Mexican oil giant Pemex and the national airline of the United Arab Emirates.

Economist Veronique de Rugy wrote: "[E]xport-subsidy schemes like Ex-Im do not meaningfully improve national exports….Ex-Im backs less than 2 percent of U.S. exports each year, mostly to the benefit of giant companies like Boeing and Caterpillar.

"[W]hile the bank takes credit for supporting 205,000 jobs in 2013…the Government Accounting Office criticized the bank's job calculation methodology for failing to consider how many jobs would have been created without Ex-Im, among other flaws.

"The same doubts apply to the bank's claim that it benefits taxpayers. [The GAO] report debunks claims of future Ex-Im profitability. Ex-Im is projected to yield losses for taxpayers over the next decade."

Ex-Im also imposes costs on the companies which produce the other 98 percent of unsubsidized exports. Unsubsidized companies face a competitive disadvantage, and their export opportunities are diminished by making financing for purchases less available. Ex-Im's risk-indemnification incentivizes lenders to shift loans away from unsubsidized towards subsidized manufacturers regardless of their products' relative merits.
Employers facing Ex-Im-subsidized competition are less able to grow jobs, increase wages, and may even be forced to lay off employees.

Characteristically, Charlie Dent appeared in media on Ex-Im: "We know leverage when we have it…A lot of us felt like we needed to get to a point where something so important to the economy was authorized…GE has agreed to move manufacturing jobs to France, Canada, Britain, Hungary and China..."

GE did issue (empty) threats to lawmakers about withholding contributions and moving operations offshore. But GE had already made a deal with the French government to move jobs there in exchange for approving GE's merger with large French manufacturer Alstom. According to the company's annual report, GE had 10,000 employees in France before Ex-im's charter expired. In fact, GE already had employees in every country Dent named.

If they're genuinely concerned about American jobs, wouldn't Dent, Costello and fellow Washington giveaway artists first demand repatriation of GE's and all other Ex-Im beneficiaries' foreign-based jobs before considering reauthorizing taxpayer-guaranteed export subsidies?

Or do handouts to Boeing, GE and Caterpillar -- and their campaign contributions -- trump American jobs and taxpayers?


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