On February 17, 2011, after touring Boeing’s plant in Everett, Washington, where the Dreamliner is built, President Obama announced that he will ask Congress to reauthorize the Export-Import Bank of the United States (Ex-Im Bank), and that he will encourage the bank to match export financing provided by foreign governments in an effort to “ensure that [manufacturers] are competing on an even footing.” The President’s statement dovetails with his “fairness” agenda, but Ex-Im Bank is unalloyed corporate welfare. Its populist mission – the subsidization of American exports – might appeal to a wide swath of economically unsophisticated observers, but it is nonetheless un unfair giveaway of tax dollars. Ex-Im Bank should be terminated, not renewed, and certainly not expanded.

Ex-Im Bank provides billion of dollars in taxpayer-backed direct loans, loan guarantees, and export-credit insurance to private firms and foreign governments. But the bank’s mission statement that it accepts “credit and country risks that the private sector is unable or unwilling to accept,” posted on ExIm.gov, is untrue. In many years, the majority of Ex-Im Bank’s guarantees and loans have gone to Boeing, which is among the world’s largest and most profitable firms, rather than a high-risk borrower.

In 2010, Boeing reported profits of $3.31 billion. In 2009, when profits were a measly $1.31 billion, Boeing received $8.4 of the $9.3 billion in loan guarantees issued by Ex-Im Bank. It is telling that President Obama made his announcement from Boeing’s plant, since Ex-Im has long been known as “Boeing’s Bank.”

Ex-Im Bank has also made or guaranteed loans to Halliburton, Dell, Caterpillar, Chevron, Emirates Airlines, and United Technologies. Despite its foreign ownership and profits of $964 million in 2010, Emirates Airlines received subsidies through Ex-Im Bank’s Export Credit Insurance program, which guarantees loans issued to foreign companies that import American goods. When Emirates borrowed money to buy planes from Boeing, Ex-Im Bank helped Emirates obtain a lower rate by guaranteeing the loan. Had Emirates defaulted, Ex-Im Bank would have stepped in with taxpayer dollars.

As CAGW has pointed out before, the Ex-Im Bank’s dual claims of simultaneously supporting itself at no cost to taxpayers while exclusively making loans eschewed by private lenders are mutually exclusive. Ex-Im Bank often justifies its mandate by pointing out that it operates at no cost to taxpayers. While it is true that the bank makes a profit in some years, that is only possible because it does so much business with successful firms with excellent credit ratings. If Ex-Im Bank were truly focused on filling “gaps in private export financing,” those profits would disappear.

Further, as the Congressional Budget Office (CBO) argued in 2007, Ex-Im Bank’s net effect on total exports by American firms is likely null. In its 2007 Budget Options report, CBO explained that Ex-Im Bank “deliver[s] benefits to foreign consumers and selected U.S. firms. To the extent that subsidized U.S. exports increase, changes in foreign exchange rates raise prices and reduce sales of unsubsidized U.S. exports.” Put bluntly, Ex-Im Bank is good for Boeing and other large companies, but bad for taxpayers and useless as a mechanism for economic growth.

-- Luke Gelber