Morning Action: Getting Shafted by the Export-Import Bank
Fasten your seatbelts, folks. The debate over huge taxpayer subsidies for Boeing and other corporate high-fliers is getting more turbulent by the day.
At issue is whether Congress ought to reauthorize the Export-Import Bank, which provides subsidized financing for export deals involving billionaire businesses such as the aforementioned aerospace conglomerate as well as General Electric, Caterpillar, John Deere, and Bechtel.
Allowing the bank’s charter to expire is the rational course of action. But with opposition to this particular form of corporate welfare on the rise, Ex-Im officials have turned to dirty tricks to undercut their critics (not unlike their bureaucrat-brethren at the IRS).
Here’s the scoop: On March 25, the bank issued a press release touting a $45-million finance deal for the Brazilian airline VRG Linhas Aereas S.A. (or GOL, as they say in Sao Paulo). According to the Ex-Im statement, the financing would save some 400 jobs at Delta TechOps, the U.S. company that performs the airplane maintenance for which GOL sought some cash.
One might reasonably presume, therefore, that Delta is as gung-ho as Boeing for Ex-Im. After all, it was featured prominently in the bank’s announcement—in every one of the seven paragraphs, as well as the headline.
The facts are otherwise, however. Delta was not involved in this or any other deal between GOL and Ex-Im, and the airline is not among Ex-Im’s corporate cheerleaders, far from it. Rather than benefit from the cronyism, the carrier actually gets burned by the bank, and is up front about it. That’s because a very large proportion of Ex-Im subsidies flow (via Boeing) to foreign carriers that thus gain a competitive advantage over Delta and other domestics.
Nor is Delta the only American company that gets shafted by Ex-Im.
Bank officials were well aware of Delta’s position, and yet they still went ahead and papered Capitol Hill with the Delta-GOL announcement. Their scheme to discredit Delta would be admirable for its cunning were it not so sinister.
Alas, such political machinations are not so surprising for an entity doling out billions of dollars to a bunch of big businesses (for deals in Russia, China, Venezuela, among others). But it ought to make taxpayers very uncomfortable. Although Ex-Im officials evidently are well-versed in Machiavelli, they are lousy at managing taxpayers’ money. To wit: the latest report to Congress by Ex–Im’s inspector general notes insufficient policies to prevent waste, fraud, and abuse. According to the IG, the bank also exhibits “weaknesses in governance and internal controls for business operations.”
Such operational shortcomings have worsened as the number and value of bank transactions have increased. In FY 2013, the bank authorized financing totaling $27.3 billion—a 28 percent increase from 2009—including $636 million for China and $630 million for Russia. By year’s end, taxpayers will be on the hook for some $140 billion.
Ex–Im advocates offer myriad excuses for continuing the subsidies, but they just don’t stand up to the facts. If they did, they wouldn’t find it necessary to resort to deception to make their case.