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Corporate Welfare at its Worst

The United States has a $6 trillion national debt, a growing deficit and is borrowing money from the Social Security Trust Fund in order to fund government services.We can no longer afford to pro

Sen. Bernie Sanders

May 22, 2002

The United States has a $6 trillion national debt, a growing deficit and is borrowing money from the Social Security Trust Fund in order to fund government services.We can no longer afford to provide more than $125 billion every year in corporate welfare–tax breaks, subsidies and other wasteful spending–that goes to some of the largest, most profitable corporations in America.

One of the most egregious forms of corporate welfare can be found at a little-known federal agency called the Export-Import Bank, an institution that has a budget of about $1 billion a year and the capability of putting at risk some $15.5 billion in loan guarantees annually.At a time when the government is underfunding veterans’ needs, education, healthcare, housing and many other vital services, more than 80 percent of the subsidies distributed by the Export-Import Bank goes to Fortune 500 corporations.Among the companies that receive taxpayer support from the Ex-Im are Enron, Boeing, Halliburton, Mobil, IBM, General Electric, AT&T, Motorola, Lucent Technologies, FedEx, General Motors, Raytheon and United Technologies.

You name the large multinational corporation, many of which make substantial campaign contributions to both political parties, and they’re on the Ex-Im welfare line.Needless to say, many of these same companies receiving taxpayer support pay exorbitant salaries and benefits to their CEOs.IBM, for example, gave its former CEO Lou Gerstner more than $260 million in stock options while it was lining up for Ex-Im handouts.

The great irony of Ex-Im policy is not just that taxpayer support goes to wealthy and profitable corporations that don’t need it, but that in the name of “job creation” a substantial amount of federal funding goes to precisely those corporations that are eliminating hundreds of thousands of American jobs.In other words, American workers are providing funding to companies that are shutting down the plants in which they work and moving them to China, Mexico, Vietnam and wherever else they can find cheap labor.

For example, General Electric has received more than $2.5 billion in direct loans and loan guarantees from the Ex-Im Bank.And what was the result?From 1975 to 1995 GE reduced its work force from 667,000 to 398,000, a decline of 269,000 jobs. In fact, while taking the Ex-Im Bank subsidies, GE was extremely public about its “globalization” plans to lay off US workers and move jobs to Third World countries.Jack Welch, the longtime CEO of GE stated, “Ideally, you’d have every plant you own on a barge.”

General Motors has received more than $500 million in direct loans and loan guarantees from the Export-Import Bank.The result?GM has shrunk its US work force from 559,000 to 314,000.

Motorola has received almost $500 million in direct loans and loan subsidies from the Ex-Im Bank.The result? A mere 56 percent of its work force is now located in the United States.

In fact, according to Time magazine, the top five recipients of Ex-Im subsidies over the past decade have reduced their work force by 38 percent–more than a third of a million jobs down the drain.These same five companies have received more than 60 percent of all Export-Import Bank subsidies.Boeing, the leading Ex-Im recipient, has reduced its work force by more than 100,000 employees over the past ten years.

Here are a few examples of your Ex-Im taxpayer dollars at work:

The Export-Import Bank has provided an $18 million loan to help a Chinese steel mill purchase equipment to modernize its plant.This Chinese company has been accused of illegally dumping steel into the United States–exacerbating the crisis in our steel industry.

Since 1994 the Ex-Im Bank has provided $673 million in loans and loan guarantees for projects related to the Enron Corporation, leaving taxpayers exposed to $514 million.The bank approved a $300 million loan for an Enron-related project in India even though the World Bank repeatedly refused to finance it because it was “not economically viable.”

The bank is subsidizing Boeing aircraft sales to the Chinese military.According to the president of Machinists’ Local 751: “Boeing used to make tail sections for the 737 in Wichita, but they moved the work to a military factory in Xian, China.Is this Boeing’s definition of free trade, to have American workers compete with Chinese labor making $50 a month under military discipline?”

The bank insured a $3 million loan to help General Electric build a factory where Mexican workers will make parts for appliances to export back to the United States.This project is responsible for the loss of 1,500 American jobs in Bloomington, Indiana.

And on and on it goes.The bottom line is that if the Export-Import Bank cannot be reformed so as to become a vehicle for real job creation in the United States, it should be eliminated.American citizens have better things to do with their money than support an agency that provides welfare for corporations that couldn’t care less about American workers.

Sen. Bernie SandersSen. Bernie Sanders, a member of the Senate Democratic Caucus, is the longest-serving Independent in US congressional history.


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