This time of year, many of us make a point to both reflect and look forward. It brings a sense of optimism, with the hope that each of us – and our country – will be able to overcome the challenges we will no doubt face in 2015.
As far as challenges go, however, one obscure government agency already has their hands more full than most: the Export-Import Bank of the United States. They barely survived a legislative battle over the renewal of their charter last summer, eking out a temporary extension lasting until June 30. Next year, the bank’s main mission will be fighting for their very survival yet again in the face of mounting evidence showing the institution to be both unnecessary and burdensome to the American taxpayer.
Of course, serving American taxpayers does not appear to be the bank’s top priority – despite being an arm of their government. That may explain why they are forced to use convoluted government accounting to claim they post a profit, when the Congressional Budget Office reported that they actually generate an annual cost of $200 million. A real commitment to fiscal responsibility should spur the bank to present the facts honestly, not hide behind smoke-and-mirror accounting.
This is hardly the only instance in which the bank has been less than fully forthcoming, or otherwise bungled their internal or external reporting. Earlier this year, a study by the Mercatus Center at George Mason University found that since 2007, the Bank has designated $24.4 billion to projects with industries designated simply as “unknown.” Were they too lazy to accurately report the final destination of these taxpayer-backed dollars, or were they really unable to classify nearly $25 billion of their business?
More recently, Reuters broke the story that Ex-Im “misclassified” some $3 billion in taxpayer-backed funding intended for small businesses over eight years. “Misclassified” could also be translated as “sent the money to Big Business instead.” Among the businesses listed as “small” was Bechtel Corp. – which Reuters reported actually has some 53,000 employees – as well as subsidiaries of companies owned by Warren Buffett and Carlos Slim, two of the world’s richest men.
Shepherding money toward massive multinational conglomerates – accidentally or otherwise – is nothing new for the Export-Import Bank. In fact, it appears to be their bread and butter: sixty percent of their funding goes to a mere ten corporations, among them some of the country’s largest. These include Bechtel – which, remember, the Bank also “mislabeled” as a “small” business – along with Caterpillar and General Electric.
Nobody benefits more from Ex-Im’s largesse than the Boeing Corporation. They top the list of Ex-Im funding recipients by a significant margin – netting over $8 billion in 2013. That may be a drop in the bucket for a $90 billion company, but it must be hard to say “no” to government handouts.
The deals that Ex-Im underwrites for Boeing amount to some of the bank’s more questionable financial decisions. They help foreign airlines – many of which have significant support from their own governments – purchase wide-body aircraft from Boeing. Ex-Im gives these foreign airlines a below-market rate and favorable terms, giving them a break that American companies do not get when they purchase Boeing jets themselves. That puts the foreign carriers at a competitive advantage. This does more than cut into U.S. airlines’ bottom lines – it has already cost over 7,000 American jobs in the industry and puts even more at risk.
This might explain why Fred Hochberg, the bank’s chairman, has decided to play bob-and-weave with Congress. It took a subpoena from the U.S. House Oversight and Government Reform Committee to get Hochberg to hand over transcripts of his agency’s meetings, but he refuses to allow investigators to interview Ex-Im officials. Why is a federal employee blocking the people’s elected representatives from finding out how their tax dollars are being spent?
A culture of obfuscation and hindrance – from acrobatic accounting practices to faulty reporting to spurning oversight – is pervasive at the Ex-Im Bank. It is almost as though they will stop at nothing to keep buoying massive corporations that certainly don’t need additional taxpayer-backed subsidies. Next year, maybe the taxpayers should stop backing the bank in return.