Rare is the issue that unites Michigan’s Democratic Sens. Carl Levin and Debbie Stabenow with their chamber’s most conservative members. But when federal subsidies to foreign firms threaten American jobs, lawmakers on both sides of the aisle find common cause—and rightly so. Taxpayers should not be financing overseas business ventures that undercut U.S. companies.

The culprit is the Export-Import Bank, a little-known government agency that “facilitates” U.S. exports by doling out loans and loan guarantees as well as providing capital and credit insurance. Last year alone, bank authorizations exceeded $27 billion, bringing taxpayers’ total exposure to nearly $134 billion… at least. The bank’s sloppy record-keeping obscures the actual amount of outstanding commitments. In all likelihood, they exceed the $140 billion cap set by Congress in 2012.

The drawbacks of Ex-Im are important to acknowledge as Congress considers whether to reauthorize the bank or allow its charter to expire on September 30. Terminating the bank should be an easy call for lawmakers. Even President Barack Obama, back when he was a candidate, endorsed its end. With strong growth in privately financed exports, there is no justification for maintaining this Depression-era relic.

Government authorities have documented a variety of problems with bank operations, including mismanagement, dysfunction, and miscalculated risk. Such problems inevitably arise when government assumes a function far beyond its proper purview. But just the fact that Ex–Im financing handicaps some American businesses is sufficient reason to end it.

Recently, for example, the bank approved $694 million in financing for U.S. equipment to develop an open-pit iron ore mine in Australia (owned by the country’s richest woman). The deal was consummated despite warnings from the United Steel Workers, the Iron Mining Association, and all four Senators from Minnesota and Michigan that the subsidies would jeopardize thousands of U.S. mining jobs—including hundreds in the Upper Peninsula.

Sens. Levin and Stabenow, in a joint letter to the chairman and president of the bank, argued against the project, stating: “We are concerned that the proposed Ex-Im financing and the large amount of iron capacity that it would subsidize will contribute to the already existing global overcapacity of iron ore and, in turn, substantially injure American iron ore and steel producers and their employees that are competing in the same global marketplace.”

Likewise harmed is Delta Airlines, which acquired Detroit as a hub following its 2008 merger with Northwest Airlines. The company, along with the Airline Pilots Association, filed a legal challenge last year against Ex-Im for providing financing to five foreign airlines for the purchase of Boeing aircraft. According to the lawsuit:

The bank’s aggressive approach to aircraft financing allows foreign airlines to borrow at much cheaper rates than they could in the private market. Cheaper financing, in turn, leads to competitive advantages for foreign airlines…shifts industry growth abroad, and puts downward pressure on American production and employment.

Multinational corporations such as Boeing attract the largest proportion of Ex–Im financing. Other major beneficiaries include the construction and engineering firm of Bechtel, ranked by Forbes as the fourth-largest privately held company by revenue, John Deere, with 2013 net income estimated at $3.3 billion, and Ford Motor Co., with a market capitalization of some $66 billion.

To claim, as bank officials do, that companies such as Ford need taxpayer-subsidies to export is ludicrous—particularly in light of the fact that 98 percent of all U.S. exports do not receive Ex-Im assistance.

Taxpayers, too, are at risk. Every cent of Ex–Im financing is backed by “the full faith and credit of the United States,” which means taxpayers are on the hook for any and all losses that bank reserves fail to cover. Officials boast that the bank currently runs a surplus, but that wasn’t the case in the 1980s, when Ex-Im accumulated a deficit of $5.3 billion. Meanwhile, the Congressional Budget Office last week released a report refuting the bank’s claim. According to CBO, Ex–Im programs actually operate at a deficit that will cost taxpayers some $2 billion in the next decade rather than a $14 billion surplus claimed by bank officials.

Allowing the bank’s charter to expire should be a no-brainer for lawmakers. Privately financed export growth is strong. Rather than perpetuate Ex-Im subsidies, Congress should reduce corporate tax rates and regulatory burdens to help all American businesses. 

 - Diane Katz, formerly of The Detroit News, is a research fellow in The Heritage Foundation’s Institute for Economic Freedom and Opportunity.