September 30, 2015
Steve Mufson picked up the Washington elite’s quest to get more money for some of the country’s biggest corporations by telling readers that the Export-Import Bank is not really corporate welfare because it makes a profit.
“It isn’t much welfare; the bank has an excellent lending record — a default rate of 0.175 percent as of September 2014 and a 50 percent recovery rate on defaulted loans — and the appropriation for about $110 million covers administrative expenses.”
This displays the sort of basic confusion on economics that readers have come to expect from the Washington Post. The point is that the government is subsidizing loans to some of the largest companies in the country. By relying on the creditworthiness of the U.S. government, the Ex-Im Bank is allowing a small number of huge companies, who always account for the overwhelming majority of Ex-Im bank lending, to get loans at below the market rate. This is similar to Fannie Mae and Freddie Mac which allow mortgage holders to get mortgages at a below market rate by providing a government guarantee.
This is a clear subsidy outside of Washington Post land. If it serves a public purpose, for example promoting homeownership, then it is arguably a good policy. But the nonsense and name-calling being put forth to justify the Ex-Im bank hardly make the case.
Anyhow, since the honchos will undoubtedly keep pushing the Ex-Im Bank until Boeing gets its money, how about a compromise? Any company that gets below market interest loans as a result of Ex-Im bank subsidies has to agree not to pay its top executives more than 10 times the president’s salary ($400k) for a five year period. That’s a $4 million hard cap on all compensation. The company’s top execs and all board members sign a certification to this effect promising them 10 years hard time if they lie.
What do you say folks? Can the CEO of Boeing and GE get by on $4 million a year? There are jobs at stake, right?
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