The Export-Import Bank of the United States -- informally known as the “Ex-Im Bank,” but irreverently referred to as “Boeing's Bank” behind closed doors -- is hosting a ritzy conference for power players in Washington this week.
It's another exercise in willful deception. Bank beneficiaries and bureaucrats will attempt to conceal their blatant cronyism from the public with misleading platitudes about protecting U.S. exports, job creation, and in particular small businesses.
Here's an example: “In FY 2013, Ex-Im Bank approved more than $27 billion in total authorizations to support an estimated $37.4 billion in U.S. export sales and approximately 205,000 American jobs in communities across the country. For the year, the Bank approved a record 3,413 transactions, or 89 percent, for small businesses.”
Sounds pretty impressive, no? Americans know small businesses struggle in this uncertain economy, and are understandably inclined to view the bank’s operations in a more positive light when they hear statements like that.
There’s one big problem: The claim is misleading.
It's true that small businesses account for 89 percent of the total number of deals. But the value of those deals tells a different story. For fiscal year 2013, for instance, only $5.2 billion of the $27.3 billion in total authorization amounts, or 19 percent, was designated as “small business” activity on the Ex-Im Bank's annual report.
The bank is also pretty fast and loose with its definition of “small business" to include manufacturing and wholesale firms with 500 to 1,500 employees. Other sectors can contain “small businesses” that earn annual revenues of up to $21.5 million. For instance, in the general construction sector, a firm counts as "small" if it earns anywhere between $13.5 million and $17 million a year.
The organization’s definition of “small business” is more expansive than the Small Business Administration’s. With few exceptions, the SBA sets their threshold at 500 employees and average annual receipts at $7 million — considerably smaller than the bank’s. Other government institutions like the Federal Reserve adhere to the SBA’s definitions — thus raising the question of why the Ex-Im Bank in particular found it necessary to create their own standards.
It is clear that what is a “small business” to the Ex-Im Bank is not what most Americans think of when they hear the term. Perhaps this can be explained by Ex-Im’s long history of rubbing elbows with the big guys. The Ex-Im Bank has been in the “big business” business for so long it can’t distinguish a publicly traded corporation from a local coffee shop.
In truth, the bank's main beneficiaries are giant manufacturing conglomerates and aerospace contractors. The bank's main customer happens to be America's No. 1 exporter and manufacturing giant: Boeing. According to the bank's data, in fiscal year 2013, Boeing procured roughly 66 percent of Ex-Im's loan guarantees. Ex-Im reports that Boeing was designated primary exporter for 55 deals (including insurance, loans, and guarantees) valued at roughly $8.3 billion in total assistance.
Sometimes, the bank doesn’t report where the money goes at all. The second-largest exporting beneficiary, topping off at $2.9 billion in Ex-Im assistance in fiscal 2013, is simply labeled as "unknown." And the top 10 exporter beneficiaries received roughly 75 percent of total assistance last year.
Diane Katz, a Heritage Foundation regulatory research fellow, assembled a helpful list of some of the biggest beneficiaries. The list reads like a “who's who” of powerful exporting empires: General Electric, Dow Chemical, Bechtel, Caterpillar, and John Deere all enjoy the bank's support of “small business” and “job creation.”
The bank’s transparent “small business” pitch should bother us. But the truth is it's unrealistic to expect Americans to monitor every deal and bald-faced half-truth that comes out of Ex-Im reports and balance sheets.
This is the tragic conclusion of public choice economics: Private benefits for Boeing and Caterpillar continue unabated because the costs are dispersed among millions of taxpayers who simply don’t have the time and energy to fight this injustice.
Big business lobbyists have “all hands on deck” at this year's conference to protect their cash cow. But that's no reason for us to buy what they are selling.
VERONIQUE DE RUGY, a Washington Examiner columnist, is a senior research fellow of the Mercatus Center at George Mason University.