Andrew Evans from Free Beacon has recently covered the current state of policies that the Ex-Im bank is undertaking. The Export-Import Bank is a government agency that gives credit to companies, often companies with big political connections. This week the president of the Ex-Im bank announced that their effort to “support” the economy will not diminish if or when the U.S. economy improves, which means that they will still support their crony friends indefinitely.
Congress reauthorized the bank after a bitter fight in the House of Representatives last year. Part of the deal that won the bank reauthorization required the treasury secretary to initiate negotiations with other countries to reduce and ultimately eliminate export subsidies. The Treasury Department did not return a request for comment on the status of these negotiations.
Committee ranking member Mike Crapo (R., Idaho) raised several objections to the bank in his opening statement, including that the bank offers “corporate welfare” to businesses and some of its financing hurts domestic companies. The three Democrats who attended the hearing praised Hochberg’s work at the bank.
Angela Greiling Keane at Bloomberg writes an article about the numbers behind an automaker that the government has given millions of taxpayer dollars:
Fisker Automotive Inc. spent more than six times as much U.S. taxpayer and investor money to produce each luxury plug-in car it sold than the company received from customers, according to a research report.
The Anaheim, California-based company made about 2,500 of its $103,000 Karmas before halting production last year, disrupting its plans to use a $529 million U.S. loan to restart a shuttered Delaware factory owned by the predecessor of General Motors Co. (GM) The Karma was assembled in Finland.
A WSJ column by Kimberley A. Strassel delves into the cronyism involved in the government loan process for automakers, showing an example of a company that was almost given loans despite clear signs they were not qualified:
For an excellent study in how green-energy cronyism works, look instead to the near miss (for taxpayers) of Next AutoWorks. That startup applied for a $320 million federal loan guarantee in 2009, promising a Louisiana factory that would produce cheap and fuel-efficient cars. Next didn’t, ultimately, get its loans.
It wasn’t from a lack of political lobbying. Emails referenced in a House Oversight subcommittee hearing this week confirm every suspicion about the degree to which powerful moneymen worked the system on behalf of their investments, pushing their political contacts to roll over Energy’s credit department.
The following article written by the Washington Free Beacon Staff highlights the massive conflicts of economic interests and negative implications that the Ex-Im Bank generates in the U.S. economy. The bank stimulates and subsidizes Boeing by extending cheap credit to international airlines that buy Boeing aircraft. This inflicts damage on the prices and competitiveness of American based airlines. This is a clear example of the negative unintended consequences of government intervention and its process of picking winner and losers.
Also reported by Bloomberg:
Delta, in a lawsuit filed today in federal court in Washington, seeks to stop guarantees of more than $100 million approved for Emirates Airlines, LOT Polish Airlines, Etihad Airways, Latam Airlines Group (LFL) and Korean Air Lines. Because Ex-Im Bank loan guarantees lower their cost of capital, these foreign airlines will recoup their investment in their new aircraft faster or reduce ticket prices on competing routes without adversely impacting their relative rate of return on those investments,” Delta said in its complaint.
More than 80 percent of the bank’s financing in fiscal year 2012 went to the American airplane manufacturer Boeing, which competes with the heavily subsidized European manufacturer Airbus, reported Timothy Carney of the Washington Examiner last year.
Andrew Evans at the Washington Free Beacon writes about some questionable activities by the Ex-Im bank, long criticized for engaging in corporate welfare.
A discrepancy exists between the public data published by a U.S. export support agency and the agency’s actual work, raising questions for the bank’s critics.
The U.S. Export-Import Bank (Ex-Im) approved financing to support the export of solar panels manufactured by SolarWorld in three separate deals between 2009 and 2012, according to the bank’s data…
However, Ex-Im never actually issued the financing to support the SolarWorld exports in the three deals in South Korea, India, and Canada, contrary to a previous report by the Washington Free Beacon.
Rich Tucker at The Foundry blog writes about the USDA’s most recent crony consideration.
The Wall Street Journal reports that the Agriculture Department may buy some 400,000 tons of sugar to prevent processors from defaulting on $862 million in loans. These loan guarantees keep prices artificially high for consumers, who are already paying far more than they need to for sugar.
This isn’t simply bad fiscal policy; it’s costing Americans jobs. “For each one sugar growing and harvesting job saved through high U.S. sugar prices, nearly three confectionery manufacturing jobs are lost,” the Commerce Department reports.
Alexandra Wexler writes an article at the WSJ (subscription req’d) about a possible federal government bailout of the US sugar processors industry, due to falling prices. But favoritism towards one industry comes at the cost of another, and consumers as well.
The move would benefit companies that turn sugar beets and sugar cane into granulated sweetener, a business plied by American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp…
Higher prices would hit food companies including candy giants Mars Inc., Hershey Co. and Nestlé SA, and could ultimately boost retail food prices, at a time when many consumers are financially stretched.
“Clearly, the USDA has made up its mind that Big Sugar is going to trump the American consumer,” said Pierson Bob Clair, president and chief executive at Brown & Haley, a confectioner in Tacoma, Wash., that makes Roca butter-crunch candy.
Paul Chesser from the National Legal and Policy Center (NLPC) has recently reported the recent actions that the Inspector General for the U.S. Department of Energy is taking against the LG battery maker plant in Holland, Mich. Fourth months ago the workers of the plant were caught playing games and watching videos instead of producing batteries. The plant was granted $151 million in taxpayer’s money to “produce” batteries; apparently the DOE’s stimulus grant went to subsidize the worker’s Texas Hold ‘Em games during working hours instead.
You can read the final report of the Inspector General here:
Gregory Friedman released his report – which was based on an inquiry spurred by the original media stories in the fall about the mostly idle workers in Holland, Mich. – last week. Turns out the reports about workers on-the-clock playing Texas Hold ‘Em and video games, doing Sudoku and crossword puzzles, and volunteering at nonprofits like Habitat for Humanity, were not exaggerations.
In the words of the inspector, “We confirmed the allegations.” The work that was supposed to be done under DOE’s stimulus grant to LG Chem “had not been managed effectively.” The claim that DOE reimbursed LG Chem for man-hours of labor – that couldn’t even be considered “make-work” – “was substantiated,” according to Friedman.
The Export-Import bank, established by the federal government, has just released a communication bulletin reporting a $500 million loan to a Russian airline operator. The condition stated by the EX-IM bank for this generous loan is that the Russian operators have to purchase Boeing 777 aircraft.
The board of the Export-Import Bank of the United States (Ex-Im Bank) voted to guarantee a loan of more than $500 million provided by Apple Bank for Savings to OJSC VEB Leasing (VEBL) of Moscow for the export of a fleet of Boeing 777 aircraft to Russia to be operated by Aeroflot Russian Airlines (Aeroflot). Boeing delivered the first of the aircraft earlier this month.
“Boeing is very pleased that Aeroflot becomes Russia’s first airline to add the 777-300ER to its fleet,” said Marty Bentrott, Boeing Commercial Airplanes sales vice president for the Middle East, Russian and Central Asia.
Paul Chesser from NLPC has recently covered the recent unfortunate events concerning New York Times journalist John Broder test’s drive on the new (State-backed) Tesla Model S. It appears that the $465 million “investment “of the federal government on Tesla motors is running out of energy.
After the experience recounted last week by New York Times journalist John Broder, who test drove the Tesla Model S in frigid conditions that required frequent unplanned recharging stops throughout the Northeast…
At least the Tesla Model S didn’t catch fire. But Musk’s (Tesla’s owner) reaction nonetheless exhibits a bit of hubris, which is especially distasteful from a man who asked for, and received, a $465 million loan guarantee from U.S. taxpayers to help build his $101,000 toy electric car for rich people.