The Daily Caller

The Daily Caller

Banking on the path to fiscal ruin

Photo of Ken Blackwell
Ken Blackwell
Former Ohio Secretary of State

A trend has taken shape in Washington, and it has put our country on a devastating path toward potential fiscal ruin. The trend is characterized by an unsustainable penchant for spending money we don’t have. It became crystal clear in last year’s debt-ceiling negotiations and was further highlighted by the recent debate surrounding the fiscal cliff: our country is broke, yet our government continues to spend more, risk more and accumulate more debt. Entitlements are often blamed for the vast majority of our spending issues, but our tendency to overspend is not restricted to just these. Parallels exist across the spectrum of government agencies — each case portraying the same doomed philosophy that threatens the solvency of our entire economy. A telling example is the Export-Import Bank (Ex-Im): an anti-free-market institution that consistently risks billions of public dollars for the sake of corporate welfare.

The Ex-Im Bank is a taxpayer-backed federal agency charged with financing U.S. exports to countries around the world. Through the use of direct loans and loan guarantees, the Ex-Im Bank facilitates the sale of U.S.-made products to entities and nations that would otherwise be unable to obtain them. With a massive budget backed by the goodwill of the American taxpayers, one would hope the Ex-Im Bank is both transparent and generally risk-averse in its practices. It turns out, it is not.

Directed by politically driven backroom deals, the Ex-Im Bank’s portfolio of investments is a hodgepodge of hits and misses. Consider the following: Solyndra, prior to its bankruptcy, received a $10.3 million loan from the Ex-Im Bank. Las Vegas solar plant Amonix, prior to its bankruptcy, received a $9 million loan guarantee from the Ex-Im Bank. Abound Solar, prior to its bankruptcy, took in $9.2 million from the Ex-Im Bank. Notice a pattern? For a government organization whose financial agreements are backed by U.S. taxpayers, the Ex-Im Bank seems to ignore common-sense investing principles, choosing instead to make a remarkable number of risky bets. Where the Ex-Im Bank is successful with its investments, it is detrimental to free-market competition.

During FY 2012, the Ex-Im Bank authorized $14.7 billion in loan guarantees and direct financial aid. Of that $14.7 billion, 82.7 percent, or $12.2 billion, went directly toward financing the purchase of Boeing products (read: airplanes). But why would a company like Boeing, which enjoyed nearly $70 billion in revenue in 2011, need support from U.S. taxpayers? The answer, of course, is politics. Thanks to a cadre of lobbyists and an extensive network of Boeing supporters within the U.S. government, the company receives billions of dollars from the Ex-Im Bank each year. As is often the case with politically driven investments, however, there is still risk involved.