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Americans for Prosperity, a libertarian group founded in 2004 by brothers Charles and David Koch, bought a Dec. 10 full-page ad in The Gazette to criticize U.S. Rep. Abby Finkenauer, a freshman Democrat facing reelection in November 2020.
The group, based in Arlington, Va., says in the ad Finkenauer 'voted to extend a failed agency, the Export-Import Bank that:
' Unfairly extends taxpayer-backed handouts to foreign companies such as Air China and Saudi Aramco
' Provides an unfair advantage to large, handpicked companies
' Costs taxpayers billions in corporate welfare subsidies.”
The ad uses a bunch of loaded words including 'failed,” 'handouts” and 'unfair” designed to make a reader feel negatively toward Finkenauer. We don't check those words because they are value judgments.
The Export-Import Bank, founded in 1934 and known as the ExIm, is a U.S. government corporation that provides financing to U.S. companies trying to export goods when the firms can't get financing from the private sector. The bank considers itself self-sustaining, paying for operational expenses from fees and interest income before sending remaining collections back to the U.S. Treasury. (See Claim 4 for more information on this.)
Americans for Prosperity, which supports free markets and warns against a rising national debt, has been fighting against the bank since 2013, Politico reports.
Americans for Prosperity and similar groups claimed a victory in 2015 when the bank's charter lapsed for five months, but Congress wedged reauthorization into a transportation bill.
The ExIm's authority was again set to expire in September, but a seven-year reauthorization passed the Democratic-controlled House and Republican-controlled Senate and was signed into law Dec. 20 by GOP President Donald Trump.
Americans for Prosperity announced Dec. 5 a 'six-figure direct mail, digital, and newspaper advertising effort” attacking nine Democrats and six Republicans who voted to extend ExIm.
Finkenauer and Democratic Rep. Cindy Axne, who represents Iowa's 3rd Congressional District, both are on the list.
Claim 1: Americans for Prosperity is right Finkenauer voted to extend the ExIm bank. The Dubuque Democrat voted Nov. 15 with 221 other Democrats, including Iowans Axne and Rep. Dave Loebsack.
The only House Democrats to vote against it were Alexandria Ocasio-Cortez of New York; Rashida Tlaib of Michigan; Jared Huffman of California; and Ayanna Pressley of Massachusetts. Thirteen House Republicans voted for it.
: Americans for Prosperity's other claims against Finkenauer are about the bank itself, which Americans for Prosperity says provided 'taxpayer-backed handouts to foreign companies such as Air China and Saudi Aramco.”
The ExIm Bank had more than 40,000 authorizations approved from October 2006 through July 2019, including many to foreign companies, according to a spreadsheet at data.gov. The data shows two transactions in 2011 worth a combined $400 million with Air China to buy aircraft from Boeing.
In 2012, the ExIm Bank approved a nearly $5 billion loan to the Sadara Chemical Company, a joint venture of Saudi Aramco and Dow, according to a news release and the ExIm timeline. This loan, the largest ever from the ExIm Bank, was to help Sadara purchase American goods and services to build a petrochemical complex in Saudi Arabia. The financing was expected to support 18,400 American jobs in 13 states, ExIm reported.
: Americans for Prosperity claims the Export-Import Bank 'provides an unfair advantage to large handpicked companies.”
Boeing is the name most often linked to these complaints, with critics calling ExIm 'Boeing's Bank.”
The aircraft and communications company received one-third of all aid provided by the bank from fiscal 2007 through fiscal 2017, making it the single largest beneficiary, reported the Mercatus Center, a Koch-funded free-market think tank at George Mason University.
Other large beneficiaries include General Electric, Bechtel and Caterpillar. All small businesses together got 22 percent of ExIm aid during the 10-year period, Mercatus reported.
ExIm supporters argue Boeing, the largest exporter in the United States by dollar amount, should be protected and that large companies must have access to these financing deals to help them remain competitive with other countries that have their own export-import banks.
'The Export-Import Bank helps ensure that American companies can compete on a level playing field with global competitors,” U.S. Sen. Maria Cantwell, D-Wash., said in a Dec. 19 statement. 'This is critical in Washington - the fourth-largest exporting state in the country by value of merchandise and commodities - where approximately 40 percent of all jobs are tied to trade. In November 2019 alone, Ex-Im financed more than $2.5 million in exports from Washington state businesses.”
Boeing was founded in Seattle and is Washington state's largest private employer.
Large companies also have contracts with thousands of small companies that provide parts or services, which further distributes aid from the Export-Import Bank, supporters say.
Claim 4: Americans for Prosperity's final claim is the Export-Import Bank 'costs taxpayers billions in corporate welfare subsidies.”
For sourcing, Americans for Prosperity pointed to a May 28, 2014, opinion piece in the National Review, in which Veronique de Rugy, a frequent critic of the ExIm Bank, reported on conflicting numbers in a 2014 report by the Congressional Budget Office.
The CBO computed, using two accounting methods, the cost of the ExIm Bank's six largest programs from 2015 to 2024. Under the Federal Credit Reporting Act of 1990, the bank would save the U.S. government $14 billion. But using fair-value accounting, the bank would cost $2 billion, the report states.
So the question is which estimate is more accurate?
The Washington Post provided insight in a 2015 fact check article.
'Both calculations use the same projected cash flows that the bank reported for the administration's 2015 budget,” author Michelle Ye Hee Lee wrote. 'The difference is that fair-value accounting accounts for ‘market risk.'”
The CBO favors the fair-value approach. The Post cited 2014 testimony from then-CBO Director Douglas Elmendorf, who said there are downsides to both accounting methods, but he advises using a method that helps policymakers understand the market risks.
'When the government finances a risky loan by selling a Treasury security, it is effectively imposing risk on some members of the public: If such a loan is repaid as expected, the interest and principal payments cover the government's obligation to the holder of the Treasury security, but if the borrower defaults, the obligation to the security holder must be paid for either by raising taxes or by cutting other spending,” Elmendorf testified.
The Export-Import Bank is controversial, with liberal Democrats and libertarians among its opponents for different reasons. But there are even more supporters of the bank, as seen by its recent reauthorization by Congress.
Americans for Prosperity is right Finkenauer voted to reauthorize the ExIm. The group also is right the bank's aid has largely benefited some of America's biggest companies and that loans have been made to some foreign firms.
Based on the claims we could check, we give them an A.
The Fact Checker team checks statements made by an Iowa political candidate/officeholder or a national candidate/officeholder about Iowa, or in ads that appear in our market.
Claims must be independently verifiable.
We give statements grades from A to F based on accuracy and context.
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This Fact Checker was researched and written by Erin Jordan of The Gazette.
Editor's note: A member of the Fact Checker team, Molly Duffy, is a fellow in the Poynter-Koch Media and Journalism Fellowship. The program is a partnership between the Poynter Institute and the Charles Koch Institute. Charles G. Koch is director of the Charles Koch Institute and co-founder of Americans for Prosperity.