Does the Ex-Im Bank Cost Taxpayers Money?
August 4, 2014
Supporters of the Export-Import (Ex-Im) Bank contend that the agency makes a profit. But according to Timothy Carney of the American Enterprise Institute, such a profit is "an accounting fiction."
Taxpayers subsidize the loans and loan guarantees that the American government, through the Ex-Im Bank, makes to foreign companies. If those companies default, taxpayers are on the hook. Fortunately, defaults in recent years have been low, explains Carney, which has kept the fees that Ex-Im imposes on borrowers above costs. This is also why supporters of the Ex-Im Bank contend that the agency deserves funding and that it costs the American taxpayer nothing.
The low rate of default, says Carney, is merely temporary and "an artifact of good fortune." He reminds readers that Fannie Mae and Freddie Mac were two other government programs that operated at no cost to the taxpayer -- until they collapsed.
To the extent that some of Ex-Im programs are profitable, writes Carney, it is even more proof that the private sector could carry out the same programs.
Source: Timothy P. Carney, "Export-Import Bank 101: The 'it makes a profit' argument," Washington Examiner, July 29, 2014.
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