|America's independent, non-partisan advocate for overburdened taxpayers.||Home | Donate | RSS | Log in|
Caterpillar Rebounds: No Need to Reauthorize Ex-Im After All
April 18, 2012
Despite our fragile economic recovery, Caterpillar, maker of ubiquitous yellow construction equipment, is doing better than ever!
Caterpillar has money to spend. The company reports first quarter earnings on April 25, with analysts expecting $2 billion of profit on $16 billion in sales, or a 47 percent increase in earnings over the entire course of 2009. Revenue this year is expected to top $71 billion, which would be $20 billion more than the company reaped in 2008.
"We came out of the recession much stronger and faster than expected," Caterpillar Chief Executive Doug Oberhelman said in a company report in March. "I'm not one for passing up sales, so we really had to ramp up production quickly."
Key to this optimism is Caterpillar's record order backlog of $30 billion, three times higher than it was in 2009. Some customers will not get trucks they have ordered until as late as 2014.
To anyone paying attention to the Export-Import Bank (Ex-Im) reauthorization debate, it’s easy to see how this could come as a surprise. Fans of the bank go on at length about how Ex-Im helps small businesses, businesses that wouldn’t be able to sell things if it weren’t for the bank – the way they go on, one would expect trade and capitalism as we know it to collapse without their loans.
So what is so surprising about Caterpillar’s recent success? Caterpillar is one of the Ex-Im’s largest beneficiaries. In fact, it ranks in the top 10 largest recipients of Ex-Im and taxpayer largess with $453,897,359.95 in total disbursements. Though to hear Ex-Im defenders, it would be easy to think that Ex-Im’s customers would go under without the bank, not that Ex-Im funds have contributed to less than one percent of Caterpillar’s expected revenue this year.
Remind me again why the government should be giving handouts to private businesses in this way?
A closer look at Caterpillar’s neighbors in the top dollar ranks doesn’t answer where Congress has the authority to be doing this – but it does explain why these companies got such big bucks and a big part of why Ex-Im continues to operate.
Alongside Caterpillar are companies like John Deere ($544,452,847.89 in Ex-Im disbursements), Ford ($500,000,000.00), and GE ($213,352,417.29). Like Caterpillar, all are well known for their cronyism and rent-seeking tactics (though, to Ford’s credit they did resist the siren song of the Auto Bailout.) At one time, they were all members of USCAP, the United States Climate Action Partnership – a big business/big government partnership that lobbies for cap and trade. Caterpillar, John Deere, and Ford all left USCAP, only when the policies the group was advocating for became policies that might hurt their bottom line. GE, the company of Obama-BFF Jeffrey Immelt, is still a proud member because their profits would skyrocket when customers are forced to buy their expensive “green” products.
It is also notable that two of the biggest advocates for Ex-Im, the Chamber of Commerce and National Association of Manufacturers, have board members that also sit on the boards of or work for Caterpillar, GE, Ford, and Boeing. Though not a member of USCAP, Boeing is the single largest recipient of Ex-Im funds with total disbursements approaching $30 billion, and received more than 40% of total Ex-Im financing in 2010. It probably doesn’t hurt that Boeing CEO Jim McNerney “chairs the president’s Export Council.” Or that “Former White House chief of staff Bill Daley served on Boeing’s board of directors…”
And that’s not the end of the crony capitalism. The Washington Free Beacon reports that the bank Candidate Obama said was “corporate welfare” is “run by political donors for the benefit of political donors.”
The bank’s board of directors—appointed by the president and approved by the Senate—is stocked with large political donors and campaign bundlers.
Ex-Im Bank chairman and president Fred P. Hochberg, for example, has personally given more than $100,000 to Democratic candidates and committees since 2007, including almost $10,000 to President Obama.
That is on top of the money he bundled for the Obama campaign in 2008—between $100,000 and $200,000.
Vice chair Wanda Felton has given more than $9,000 to Democrats since 2007, nearly all of which went to the Obama campaign.
They are joined by ex officio members Ron Kirk, the president’s trade representative, and John Bryson, who Obama recently appointed Secretary of Commerce.
Kirk bundled between $50,000 and $100,000 for Obama in 2008, and personally contributed more than $7,000 to the president’s campaign.
With new examples emerging weekly of taxpayer dollars wasted on bad bets like Solyndra and co., or used to bailout private corporations and homeowners, or to shore up Fannie Mae and Freddie Mac (two entities that, like Ex-Im, were supposedly independent, self-funding, and no risk to taxpayers), it is difficult to see why anyone in Congress would continue to abuse their responsibility towards taxpayers and continue to expose our hard earned dollars to increasing amounts of risk, especially in light of the fact that the companies who receive the most are exactly the companies that don’t need cheap government loans and loan guarantees.
These are resources that should be provided by private banks and institutions, not the government. And if the loans made by Ex-Im are as profitable and safe as proponents claim, there is no reason (other than the fact that Ex-Im distorts the marketplace and they might not be able to compete with Washington’s cut-rate cash) why private investors wouldn’t be thrilled to make the same kind of proceeds.
As frustrating as it is, in the face of so many bad examples and flagrant corporate welfare, there are still those in Congress, people who should know better and who claim to stand for limited government, that are still fighting for Ex-Im to be reauthorized. Last week, RedState.com revealed that Majority Leader Eric Cantor is pushing a deal to re-up Ex-Im:
Roll Call is reporting that Eric Cantor is negotiating with Steny Hoyer in an effort to reauthorize the Export-Import Bank, which is set to expire May 31. What’s worse is that GOP leadership is seeking Democrat support for a “compromise” to circumvent the lonely 50-70 Republicans who might block the reauthorization:
The finely calibrated deal under discussion, as described by lobbyists and aides working on the issue, would grab enough Democratic votes to overcome a bloc of 50 to 70 Republicans who strongly oppose reauthorizing the bank’s lending authority. Such a result would signal at least an appearance of centrism.
“We are working to formulate a bipartisan bill to reauthorize the Ex-Im Bank that includes needed reforms and accountability measures,” Cantor spokeswoman Laena Fallon said.
Even worse, the article goes on to state that a group of RSC members, members of the conservative Republican Study committee, are “preparing a letter supporting the bank’s reauthorization.”
It is no coincidence, that after leading a vocal outcry against Ex-Im, Delta is one of the latest recipients of Ex-Im subsidies. One can only imagine what Ex-Im and its allies have offered these others for their support.
Still, not all in Congress are so easily bought. In the House, Congressmen Amash and Flake, and in the Senate, Senator Paul, are offering “Terminate Ex-Im” legislation that provides a dignified death to an institution that has overstayed its welcome. These legislators, and those that side with them, should be applauded for their leadership on this issue – especially when even their erstwhile allies are undermining them. All three are 2011 NTU Taxpayers’ Friend Award winners and it is clear they deserve this title.
Comment on this blog