End Corporate Welfare and Start With Letting the Export-Import Bank Expire

End Corporate Welfare and Start With Letting the Export-Import Bank Expire

By J. Allen Tharp

The Tea Party, AFP, Heritage, Freedom Works, Club for Growth,  and many other conservative groups have been fighting hard to ensure that the 81 year old Export-Import Bank, which is a remnant of the ultraliberal Franklin Roosevelt’s New Deal, be allowed to expire on June 30.  The Ex-Im Bank was initially the product of 1930 big government liberals and has been propped up over the years by other big spending liberals, who personally benefit from their support for corporate welfare to large corporations.  Unfortunately politics is now all about quid pro quo, and it will not stop until we make systematic  changes to how business is done in Washington.

This means we must revamp the tax code and stop incentivizing corrupt behavior by implementing a one tier flat-fair tax.  We must pass legislation that precludes elected officials who work even one day in office, from becoming lobbyists.  And we must stop government from being able to dispense government loans, grants, and credits to their favored corporations.

Case in point: The Ex-Im Bank mostly finances and insures foreign purchases of the products of a few large corporate lobbying powerhouses. Just 10 companies were the beneficiaries of 64 percent of Ex-Im subsidies in 2013, including Boeing (30 percent), General Electric (9.5 percent), Bechtel (6.6 percent) and Caterpillar (4.9 percent).

On the buyer side of the transactions, the primary beneficiaries are also very large firms—many state-controlled—including Pemex and Emirates Airline.

Even using Ex-Im figures, only 20 percent of Ex-Im financing benefited small businesses, and those that do benefit represent just one-half of 1 percent of all American small businesses.

The problem here is that even that fraction is artificially inflated by the bank’s expansive definition of small business and They classify small, as firms with as many as 1,500 workers, as well as companies with revenues of up to $21.5 million annually. The bank also has a history of blatantly misrepresenting the size of its beneficiaries. An investigation by the Reuters news agency has found that potentially hundreds of the subsidy recipients categorized as “small businesses” by Ex-Im are actually very large enterprises or units of multinational conglomerates.

In recent years, only 20 percent or so of Ex-Im financing benefited small businesses.

“Companies owned by billionaires like Warren Buffet and Mexico’s Carlos Slim, as well as by Japanese and European conglomerates, were listed as small businesses,” Reuters reported last year. Additionally Austria’s Swarovski jewelers, North Carolina’s Global Nuclear Fuels (owned by General Electric) and Japan’s Toshiba and Hitachi were misrepresented as small business.

Right here in Texas, their list of small businesses includes engineering giant Bechtel, which has a whopping 53,000 employees.  These are not small businesses under any legitimate definition.

So, the cycle is that large corporations with lots of money and influence give money to legislators and other government officials.  Those elected representatives and government officials then reciprocate by rewarding those big donors with government tax credits, loans, grants, and favorable regulations.  The Ex-Im bank is a facilitator of this corrupt government/corporate cronyism and allows self-serving politicians to use our hard earned tax dollars to benefit themselves and their donors.

Despite the principled opposition of limited government constitutional conservatives and rather than just letting the bank expire as scheduled, GOP leadership sides with Obama, Reid, and Pelosi in support of reauthorization of the costly Ex-Im Bank.  Bowing to the direction of GOP leadership, some Republicans are equivocating when asked about their position on this bank.  We have seen some like Scalise parsing their words carefully and leaving themselves an opening by saying, “I don’t support the bank in its current form.”  In political speak, this means they could support the corrupt cronyism  under certain circumstances.

Fiscal conservatives need to continue to push establishment Republicans, privately and publicly, to stay firmly on the right side of this debate and ensure that Ex-Im goes completely away.  Be prepared to act when they abandon the conservative position in favor of the Big Business cronyism that remains the hallmark of their tenure as the majority in Congress.

By J. Allen Tharp, President, San Antonio Tea Party, May 5, 2015.

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