Speeches

Beijing's Bank

May 07 2019

Mr./Madam President,

Many Americans might be surprised to learn that some of their tax dollars are going directly to Chinese companies. And that some of those dollars even go to corporations owned by the Chinese government, like Chinese banks, Chinese development agencies, and Chinese microprocessor factories.

In recent years, in fact, China received $50 million in loans and guarantees – all backed by American citizens.

Taxpayers would be right to be puzzled and disturbed about why their hard-earned money is subsidizing Chinese state-owned companies.

How is that the case, they might ask? And an even better question, why is that the case?

The answer, Mr./Madam President, has to do with the very institution to which we are trying to confirm these nominees today.

The Export-Import Bank, or “Ex-Im”, was created during the height of the Great Depression to help U.S. exporters when they were desperate for customers and foreign markets lacked the capital to finance trade. And it was conceived particularly to help small businesses to be able to compete, as many of its current proponents still claim.

But for decades, the institution has unfortunately been used as a giant tool for corporate welfare. Ex-Im has operated to benefit the wealthiest, most politically-connected businesses in America, as well as their overseas clients and foreign governments.

Like Boeing, for instance. It’s no coincidence that Ex-Im has been nicknamed “Boeing’s Bank.”

When Ex-Im financing was at its peak, Boeing received 70% of all Export-Import Bank loan guarantees and 40% of all Ex-Im dollars.

Other large corporations that have benefitted? General Electric, John Deere, Caterpillar, and other industrial giants… hardly small businesses that are unable to get financing elsewhere.

In fact, while Ex-Im claims that 90 percent of the businesses to which it provides support are “small businesses,” these businesses received only 25 percent of the bank’s dollars. That doesn’t even touch on the fact that in 2014, Caterpillar and Boeing were the first and fourth largest recipients of so-called “small business” funds from Ex-Im.

Looking at the bank’s track record as a whole, only one-half of one percent of all small businesses in America benefit from Ex-Im financing.

And it’s a similar story on the foreign side. Abroad, Ex-Im has largely benefitted big companies that already collect massive subsidies as state-controlled entities and ones that can easily get private financing elsewhere.

The number one buyer of exports subsidized by Ex-Im between 2007 and 2013 was Pemex, the notoriously corrupt petroleum company owned by the Mexican government. Pemex – which has a market cap of $416 billion – received more than $7 billion in loans backed by U.S. taxpayers.

During the same period, Ex-Im backed $3.4 billion in financing to Emirates Airlines – a company wholly owned by the government of Dubai – for their purchase of Boeing planes.

Indeed, a large share of Ex-Im financing has historically gone to foreign airlines and foreign energy companies – businesses that are competing with American companies.

Moreover, we have been sending money to countries with dubious records on human rights and high levels of corruption.

In the last five years, Saudi Arabia and Mexico were the top foreign recipients of Ex-Im aid.

And in the past, when Ex-Im had the authority to grant larger subsidies, the top foreign recipient was typically China. In 2014, China received $2.2 billion in taxpayer-backed loans and guarantees, with most of it going to businesses owned by the Chinese government.

To top it all off, Ex-Im has had poor accounting and huge problems with transparency. In 2013, Ex-Im was either unable or unwilling to provide any justification whatsoever for half of the financing deals in its portfolio. There have already been more than 30 corruption and fraud investigations into Ex-Im’s activity.

Thankfully, Congress put a check on some of Ex-Im’s power in 2015 when it allowed the board’s quorum to expire, and thus capped its ability to make deals larger than $10 million.

What have been the results?

In the last few years, 66% of Ex-Im’s loans have actually gone to small businesses instead of to the Boeings and Caterpillars, compared to the 25% that went to them before.

And it turns out the big businesses have been doing just fine. In fact, some are doing even better than before.

Last year was Boeing’s best yet, with exports particularly strong. As Boeing itself admitted, it had “robust” private sector financing. And according to reports in 2017, there were unprecedented levels of competition among lenders and insurers to finance aircraft exports.

It turns out that when the government leaves a profitable line of business, private companies do indeed compete to take its place.

Furthermore, with the decrease in Ex-Im’s subsidies, U.S. exports have actually risen slightly. Between 2014 and 2018, exports rose from $1.7 trillion to $1.8 trillion.

Yet today, the Swamp Strikes Back. The prospect of confirming three new nominees to the Ex-Im Bank – thanks to the nuking of the Senate rules a few weeks back – suggests Boeing’s Bank will rise from the grave… to resume its long history of fraud, corruption, and abuse of power.

We do not need to empower the rich and politically-connected companies that are already flourishing, Mr. President. That only undermines trust in our government – which is supposed to protect taxpayers from corruption and waste – and ultimately prevents us from having a thriving, competitive economy.

And we do not need to use this broken, corrupt bank as a tool for countering foreign interests. The way to confront China’s and other countries’ expansionism is not to directly subsidize their state-owned companies.

No, we do not need Boeing’s bank, Mr. President. And neither do we need Beijing’s bank.

Cronyism and policy privilege threaten exactly the principles that our nation was founded upon. They subvert the rule of law by codifying inequality; and rob the ordinary Americans – the moms and pops and small business owners – from having a level playing field in what is supposed to be the land of opportunity.

If we are to move towards restoring fairness to our economy and our government, it would be in our best interest to get rid of this cronyist bank altogether.

But in the very least, we ought not empower it to its full capacity for abuse by confirming these nominees today.

I yield the floor.