So read a headline last October, when Congress was embroiled in a fight over the reauthorization of the Export-Import Bank (Ex-Im), a government-owned bank that provides financing and loan guarantees to foreign buyers of American exports. Given that Boeing spent so much money and effort arguing that closing the bank would destroy thousands of jobs, the latest news headlines about the airplane manufacturer are ironic: Boeing has just announced that it intends to cut four thousand jobs anyway, even though Ex-Im is back in business.
Last Wednesday Boeing revealed its plans to cut between four and eight thousand jobs this year in its commercial airplane division as part of a cost-cutting plan to compete with its primary foreign competitor, Airbus. While the company plans to use involuntary layoffs as a last resort, the total job reductions announced are equal to approximately 2 percent of its entire worldwide staff. Making matters worse, the company also says it will cut the delivery of about 20 commercial jets in 2016, and so far this year, Boeing’s stocks are down 9 percent.
If this was going to happen with or without Ex-Im, what was the point of reauthorizing it?
Ex-Im and its allies in big business have done more than just fail to deliver on promised benefits. There is strong evidence that the bank’s activities are actively hurting other American companies. Ex-Im subsidizes American exports by providing loan guarantees to large foreign corporations like Pemex and Air Emirates, which receive hundreds of millions of dollars in financing from the bank. These foreign companies often compete directly with rivals in the United States, such as Delta Airlines, who are put at a competitive disadvantage. According to Richard Anderson, CEO of Delta, this program is taking its toll on American jobs: Delta estimates that the advantages Ex-Im gives to the foreign competitors of American businesses have cost 7,500 jobs in the airline industry alone, as well as $684 million in revenue.
“In spite of our government’s stated goal to foster open markets free of state subsidized competition, U.S. airlines today face that very competition from our own government in the form of Ex-Im loan guarantees, subsidies that are both massive and unnecessary,” Anderson testified in 2014. “Ex-Im provides a tangible competitive advantage to foreign carriers.”
While the bank’s advocates claim it provides assistance to small and minority-owned businesses, Ex-Im is little more than a fund for corporate welfare for large, politically connected corporations. In 2013, a whopping 64 percent of the bank’s total assistance by dollar value went to only ten companies, with over 40 percent of all disbursements going to the state of Washington alone, where Boeing is based. Moreover, Hispanics make up the largest small business-owning minority in the United States, but less than 1 percent of Hispanic and minority-owned export businesses receive any assistance from the bank at all, representing barely 2 percent of the value of all minority exports. Meanwhile, their deep-pocketed competitors receive hundreds of millions of dollars in financing. Ex-Im creates an uneven playing field for American companies, and small and minority-owned businesses are getting a raw deal.
Last fall, conservative lawmakers in Congress successfully brought about the first lapse in the Ex-Im Bank’s authorization in its entire 80-year history. Unfortunately, special interests thwarted their efforts, and managed to resurrect the crony institution just a few months later. In that fight, corporations like Boeing, who benefit from Ex-Im, spent millions lobbying to keep the corporate welfare flowing, while companies like Delta Airlines, who are disadvantaged by the bank, spent millions to prevent it. These are millions of dollars that could have been put to productive use, creating value for customers and society, but were instead sucked into the black hole of special interest politics.
Unfortunately, after Boeing’s layoff announcement last week, it is now clear that we are back where we started. Enough is enough.
Payton Alexander is a policy analyst at The LIBRE Initiative.