America, with its constitutionally protected freedoms and entrepreneurial spirit, has generated prosperity at a level which is unique to the human experience.
However, if the mortgage crisis, student loan crisis, and the disastrous failure of green-energy firms have taught us anything, it is that government has a unique ability to destroy that prosperity and ruin lives while sticking taxpayers with outrageous bills.
The latest example of big government insanity is the Export-Import Bank. First established in the mid-1930s to finance exports to the Soviet Union, it became its own government agency in 1945 and decided to stick around long-after the fall of the Berlin Wall to provide corporate welfare and pick favorites among U.S. producers, with little accountability.
The Ex-Im Bank, which was established for a very narrow purpose and a small $5 million cap, is reaffirming the notion that New Deal-era bureaucracies are the nearest thing to eternal life. Today, it has expanded far beyond its charter and uses funds backed by the American people to give money to foreign companies which compete with American businesses.
While our country is $15 trillion in debt and has the highest corporate tax rate as of April 1, we are mortgaging our children’s futures to give money to politically connected multinational corporations who do not need our support.
To make matters worse, by subsidizing exports, Americans lose money which could otherwise be privately saved, invested, and spent on attractive imports. This process makes taxpayers poorer while simultaneously making American companies less profitable.
In the spirit of true bipartisanship, establishment Democrats and Republicans are both supporting the reauthorization of the Ex-Im Bank, which hopes to spend $160 billion on taxpayer money on projects which are apparently too risky for private investment capital.
General Electric, which in 2010 paid no corporate taxes after earning $150 billion in profit, was helped with over $1 billion in Ex-Im loans for that same year. Even after the Ex-Im banked more than $600-billion in loans to Enron and financed loan guarantees to foreign customers of Solyndra, the failed solar panel company which was at the heart of President Obama’s “green jobs” initiatives, bureaucrats want to keep the doors of this inherently-corrupt Keynesian institution open.
The Ex-Im bank is not supposed to make loans to countries which are bad credit risks, but it does anyway. Also, Congress is supposed to conduct reviews on how the loans could hurt American jobs, but these audits rarely, if ever, take place.
Ex-Im bank often funds the purchase of airplanes by foreign carriers which compete with American firms. A vast majority of its efforts are with airplane manufacturers such as Boeing, which according to Timothy Carney of The Washington Examiner, shockingly accounted for 90% of Ex-Im’s loan guarantees in 2009. The unfair competition, while good for Boeing, has been bad for airlines such as Delta, which was forced to stop a popular international route because it could not compete with a foreign airliner receiving Ex-Im subsidies.
It is a myth that government must run a bank to make up for a supposed market failure. If a company cannot find private funding sources, that should be a giant red flag as to why taxpayers should not be handing them money. And new, unconventional ways for risky ventures to raise capital, such as crowd-funding and micro-investing, are far more useful than anything government could develop.
Investment gimmicks subject to endless political pressure by central-planners are dubious and inherently inefficient ways to invest money. The unintended consequences of government-backed loans have been disastrous and continue to encourage companies to lobby Congress for special perks and privileges at your expense. This is a form of European-style socialism, and it is time to stop repeating failed policies.
Fiscal conservatives in Congress must make the Ex-Im bank an “ex-bank.”