OP-ED: Going after waste, abuse wherever it's found
I've made a commitment to hold Washington more accountable to the hard-working taxpayers of the 4th Congressional District. That means pursuing waste and abuse in government — including taxpayer-funded giveaways to big business.
In recent weeks, we've seen a series of robo-calls in the district trying to drum up support for the reauthorization of the Export-Import Bank (Ex-Im), which provides loans and loan guarantees as well as capital and credit insurance to facilitate U.S. exports, the financing for which is backed by the "full faith and credit" of the U.S. government; i.e., taxpayers are on the hook for losses that Ex-Im reserves fail to cover.
These calls try to highlight Ex-Im as a friend of small business — a marginal claim at best. Mostly, it subsidizes some of the wealthiest corporations in the world, often based solely on ideological political considerations, and has resulted in market distortions that hurt American companies that don't receive its financing.
Oversight by Congress has revealed the Bank resists much needed reforms recommended by its Inspector General (IG) and the Government Accountability Office (GAO). There are important IG recommendations the Bank has not implemented that would protect the U.S. taxpayer. According to the Inspector General, there are over 30 open fraud investigations related to Ex-Im's activities.
One of those deals that went bad for taxpayers involves the now bankrupt Solyndra. The former solar panel manufacturer famously went belly-up in 2011, but only after taxpayers were left on the hook for $535 million in failed "stimulus" money Solyndra received through a loan guarantee. Not as well known is that taxpayers also financed a deal in 2011 when Ex-Im guaranteed a $10.3 million loan provided by KBC Bank NV — whose parent company is one of the top three financial institutions in Belgium. The loan guarantee went to finance the sale of politically connected Solyndra's products to provide energy for a distribution center of Delhaize, a Belgian supermarket chain that posted $28 billion in revenues in 2013.
Sometimes in Washington it's not what you know, it's who you know. Since 2011, former Energy Secretary and New Mexico Governor Bill Richardson has held a seat on Spanish energy company Abengoa's International Advisory Board. Shortly after joining Abengoa, Richardson was appointed to Ex-Im's advisory board, right around the same time that two Ex-Im Bank loans benefitting Abengoa were issued. What a coincidence. Those taxpayer-backed loans Abengoa received from Ex-Im totaled around $150 million. An investigation by the Daily Caller found that "fully half" of Ex-Im's advisory board members in 2014 were executives at companies or unions that "directly benefitted from Ex-Im financing during their term."
It gets worse. One of Australia's richest citizens — reportedly worth at least $18 billion — is receiving loans backed by American taxpayers through Ex-Im. Billionaire mining heiress Gina Rinehart secured a $694 million loan from American taxpayers thanks to Ex-Im's support for her company's iron ore project. Why are U.S. taxpayers involved? This action led to oversupply in the market and hurt U.S. companies as a result.
Ex-Im never misses a public relations opportunity to claim it helps small businesses — but an investigation by Reuters revealed that Ex-Im "mischaracterized potentially hundreds of large companies and units of multinational conglomerates as small businesses ..." The GAO also previously questioned Ex-Im statements about its support for small business. The fact is, nearly two-thirds of Ex-Im's financing in fiscal year 2013 went to just 10 large corporations. While we do know that 99 percent of U.S. exports are financed without Ex-Im, we don't know what the bank costs taxpayers because they use an accounting system that does not account for market risk. The nonpartisan Congressional Budget Office has found that were these risks properly accounted for, Ex-Im would cost the taxpayer $2 billion over 10 years.
There are businesses in the 4th District that benefit from Ex-Im and have nothing to do with the sordid deals described here. They're just trying to compete in a global market. I recognize the need to scale back Ex-Im gradually to give affected businesses the opportunity to adjust accordingly. But Washington shouldn't pick winners and losers. Taxpayer money through Ex-Im shouldn't go to China and Russia — nations that openly challenge our economic and security interests, or oil-rich countries in the Middle East, or countries with atrocious human rights abuses like the Congo and the Sudan. And if we're serious about confronting our unsustainable $18 trillion debt — we must confront giveaways to big business with the same zeal we do other inefficient government programs.
Hardworking American taxpayers already have enough to deal with and shouldn't be forced to subsidize the advantages and privileges Ex-Im provides to a handful of powerful, politically-connected corporations.
— Rep. Scott Perry represents Pennsylvania's 4th Congressional District.