Friday, October 30, 2015

Reauthorizing the "Bank of Boeing"

Many of us have either heard very little about or are unaware of an Executive Branch agency that exists with the "mission of supporting American jobs by facilitating the export of U.S. goods and services".  In this era of declining manufacturing in America, this agency sounds like a great thing, unless it costs taxpayers more than it provides.

EXIM also known as the Export-Import Bank of the United States, was formed in 1934 by the Roosevelt Administration with the initial goal of providing funding to the Soviet Union and Cuba.  In fact, the first loan issued by EXIM was to the nation of Cuba so that it could purchase $3.8 million worth of silver ingots from the United States.  It became an independent agency on July 31, 1945 and became a self-funding federal government agency in 2007 although all loans are still backed by the federal government, otherwise known as the American taxpayer.  One of the requirements of EXIM is that it be reauthorized by Congress every four or five years and, on September 19, 2014, under House Joint Resolution 124, the operating authority of the Export-Import Bank was extended until June 30th, 2015.  Since July 1, 2015, this is what has been displayed on the EXIM website:

Since July 1, 2015,  EXIM has lost its authority to issue new loan guarantees to foreign purchasers of American goods.

While EXIM's primary goal is to basically create jobs in the United States through the manufacturing and exportation of American-made goods by guaranteeing loans for foreign purchasers of said goods (and services), its operation has been questioned by many analysts.   This is particularly the case for Boeing, a major player in the world's aircraft manufacturing industry.  EXIM, sometimes referred to as "The Bank of Boeing" is a major backer of Seattle, Washington-based Boeing as you can see on this diagram from the Mercatus Center:

On top of that, according to a recent article by Veronique de Rugy, EXIM reached out to Boeing for assistance in drafting new bank rules that were to be put in place to ensure that its loans take into consideration the negative impact that they have on non-subsidized American companies.  To see how distorted EXIM's disbursements have become, here is a table showing the state rankings for EXIM's disbursements between 2007 and 2014:

Not surprisingly, the state of Washington is by far the biggest beneficiary with total EXIM disbursements of $50.63 billion which means that 22.67 percent of the state's total export value being supported by EXIM.  As well, you can see that small businesses really get the short end of things; only $57.06 billion worth of small business exports are supported by EXIM out of the total of $235.62 billion worth of exports which were supported by EXIM between 2007 and 2014.  In the case of Washington, a tiny 1.03 percent of EXIM disbursements went to small businesses.

Now that we have a bit of background, let's look at the present.  On October 27, 2015, Roll Call 576 took place, voting on House Resolution 597.  This vote received relatively little coverage by the mainstream media.  For your information, here is the text of H.R. 597, otherwise known as the Export-Import Bank Reform and Reauthorization Act of 2015:

Here is a listing of who voted for and against H.R. 597 by party:

Here are the yeas:

Here are the nays:

Given that the continued existence of EXIM is critical to Boeing, let's look at how much money Boeing has spent trying to convince Washington of its viewpoint on many issues since 1998:

So far in 2015, Boeing has spent $16.755 million on lobbying in Washington, compared to $15.23 million in 2014 which put it at number 10 out of 3514 lobbyists, and could well set a "personal best" this year.   When it comes to all lobbying on trade, in 2015, Boeing has spent the fourth highest amount, following Wal-Mart, Big Pharma and the United Parcel Service.  On top of that, Boeing spent $3.253 million on campaign contributions in the 2014 cycle, benefitting these individuals and many more:

Current Democratic presidential candidate Hillary Clinton has even offered her opinion on EXIM at a recent speech in New Hampshire.  She called for "speedy reauthorization of the Export-Import Bank".  As well, back in November 2014, she stated the following:

Thank you for mentioning the EXIM Bank, because I’m a very strong supporter of the EXIM Bank, because it is a tool for us to be competitive in order to support our businesses exporting.  But there are those who wish to end the role of the Export-Import Bank, and it’s not based on evidence, it’s based on ideology.

In contrast, her main competitor, Senator Bernie Sanders, issued the following statement after the Senate voted on an amendment that would see EXIM reauthorized for five years back in June:

"At a time when almost every major corporation in this country has shut down plants and outsourced millions of American jobs, we should not be providing corporate welfare to multi-national corporations through the Export-Import Bank.

Instead of providing low-interest loans to multi-national companies that are shipping jobs to China and other low-wage countries, we should be investing in small businesses and worker-owned enterprises that want to create jobs in the United States of America.  If the Export-Import Bank cannot be reformed to become a vehicle for real job creation in the United States, it should be eliminated. 

Now that H.R. 597 has passed the House, it will be interesting to see whether Boeing has spent sufficient lobbying money to ensure that the "Bank of Boeing" receives the final stamp of approval, ensuring its continued existence for the near future.  With the Republicans and Democrats being split over EXIM, its future is certainly uncertain.

1 comment:

  1. Thank you for profiling this. When I heard that the EX-IM got reauthorized just shows that there is power behind the scenes that controls what happens. Could just be money could be something more nefarious. This bank does absolutely nothing to help out US citizens.