Call a spade a spade. Last month in Colorado, that meant calling the U.S. Export-Import Bank a clear example of corporate welfare. How else to describe a New Deal-era federal agency that uses our tax dollars to subsidize some of America’s and foreign countries’ largest corporations?
Yet that’s not what Coloradans heard when Ex-Im’s president, Fred Hochberg, visited Denver to tout the bank’s importance to the state’s economy. With Ex-Im’s charter set to expire next month, Mr. Hochberg and the bank’s corporate beneficiaries have engaged in a furious PR campaign to convince Congress—and the Colorado public—that Ex-Im is a champion of small business and is vital to the American economy.
Coloradans and our elected representatives shouldn’t buy it. Ex-Im does next to nothing for Colorado’s small businesses, and it’s bad for the American economy overall.
Ex-Im might as well be renamed the “Bank of Big Business.” With a current portfolio of $112 billion, its client list is chock-full of multinational corporations. In 2013, for instance, nearly two-thirds of the bank’s total financial support—which includes direct loans, loan guarantees, and other financial assistance—went to just 10 companies, while over 93 percent of its loan guarantees benefited just five.
Even the small businesses Ex-Im supports come with an asterisk. Using accounting methods that could only pass muster in Washington, D.C., the bank defines “small businesses” as those with up to 1,500 employees and tens of millions of dollars in annual revenues. In reality, according to the U.S. House Committee on Financial Services, “Only 1 percent of 1 percent of America’s small businesses benefit from Ex-Im.”
Which is to say that the typical Ex-Im beneficiary is no Main Street Mom ‘n’ Pop store. Many are politically connected insiders who have shaken the right Washington hands.
Consider the case of Abound Solar, a Boulder-based solar firm that secured a $9 million loan guarantee from Ex-Im in 2011. This despite the fact that it had net operating losses of $50.6 million that year and $73.8 million the year before. Just two years after receiving support from American taxpayers, Abound declared bankruptcy and left hundreds of Coloradans without jobs.
Why would a company like this benefit from our tax money? Perhaps because one of Abound’s key investors happened to be a major donor to President Obama, contributing a total of $173,000 for his 2009 inauguration and 2012 reelection. The investor also happened to be acquaintances with Colorado U.S. Rep. Jared Polis, who has personally lobbied the Obama administration to provide Abound Solar with federal funds.
It doesn’t take a conspiracy theorist to raise questions about whether this involved some political backscratching. How else to explain Ex-Im’s decision to grant a $9 million loan guarantee to a company that was on its deathbed?
This isn’t the only area in which the Export-Import Bank falls short. The bank’s other main argument — that it is vital to the U.S. economy — is also bunk. It currently supports less than 2 percent of all American exports — and only 1.3 percent here in Colorado. Allowing Ex-Im to expire will barely even be a blip on the economic radar.
Now compare that minimal economic impact to the large number of jobs Ex-Im actually threatens here at home. By giving cheap loans and other support to foreign companies, it places their U.S.-based competitors at a disadvantage when competing in global markets.
The U.S. airlines industry — with a significant hub here in Denver — can attest to this fact. According to a study by the Air Line Pilots Association, Ex-Im’s support for foreign airliners in India and the United Arab Emirates has cost 7,500 U.S. aviation jobs.
This is the reality of the Export-Import Bank — and one Mr. Hochberg avoided discussing when he was in town recently. It is a corporate welfare slush fund that benefits the politically connected at the expense of hardworking American taxpayers. Our elected representatives in Washington should put our interests above special interests and allow the Export-Import Bank’s charter to expire next month.
Dustin Zvonek is the Colorado state director of Americans for Prosperity.
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