Opinion | Corporate Welfare Wins Again in Trump’s Washington

Here is the best news about Ex-Im’s absence of a quorum: It reduced corporate welfare. Until 2015, some 65 percent of the bank’s activities benefited 10 large domestic manufacturers, including General Electric and Caterpillar. Boeing alone received almost 40 percent of Ex-Im’s largess and close to 70 percent of all loan-guarantee deals. It’s no wonder Ex-Im is called “Boeing’s bank.” In recent years, however, Boeing hasn’t gotten practically anything from Ex-Im.

But don’t cry for Boeing. It’s done just fine without taxpayer-backed support. In fact, the market capitalization of Boeing grew steadily despite its losing Ex-Im funding. That’s because Boeing is a large company that is perfectly capable of finding private financing. And so can most of the bank’s clients, many of which are rich state-owned foreign enterprises.

In reality, winding down Ex-Im probably improved the aircraft financing market, with several new sources of financing emerging to fill the gap. The credit insurance companies Euler Hermes and Markel have both expanded their United States export financing. Last month, Apollo Global Management announced it would commit $1 billion to aircraft financing. Boeing itself even helped to create an entirely new financing program for its exports. The result was record sales for the company last year.

This good news isn’t unique to Boeing. As Diane Katz of the Heritage Foundation notes, while government-backed financing for commercial aircraft shrank to 4 percent of all commercial aircraft financing in 2018 from 30 percent in 2010, sales have skyrocketed. Clearly, aircraft are not a risky export, nor are they so risky as to deter private investors.

Another mistaken notion is that Ex-Im has primarily benefited small businesses in the past, as supporters like Senator Elizabeth Warren claim. In the 2014 fiscal year, small businesses received only 25 percent of Ex-Im aid. When we dug into the data, we found that the No. 1 and No. 4 recipients of “small business” funds from Ex-Im were the mom-and-pop shops of Caterpillar and Boeing. In contrast, since the lending cap was imposed, small businesses have properly received a majority of the Ex-Im financing, with 66 percent heading their way.

The lack of a quorum has also reduced how much taxpayer money Ex-Im lavishes on relatively rich or growing countries. China is a great example. It is a growing economy, the second largest in the world, so China is not exactly a “risky” export destination. Despite this reality, exports to China represented 11 percent of the Ex-Im’s authorizations in the 2014 fiscal year. Since losing its quorum, Ex-Im cut this aid back to just 1 percent in 2018.

Larry Kudlow, a Trump economic adviser, called Ex-Im a “national security weapon” against China, but this argument alone refutes that contention. Restoring Ex-Im to its full board capacity means reverting to a system that was subsidizing China. After all, the largest foreign Ex-Im beneficiary in the 2014 fiscal year was none other than China.