NCPA - National Center for Policy Analysis

Reasons Not to Reauthorize the Export-Import Bank

June 5, 2015

Congress should not reauthorize the Ex-Im Bank because the federal government should not direct limited public resources to subsidies that benefit successful politically connected corporations at the expense of thousands of companies and millions of American workers who compete in the global marketplace without government favors. Failure to reauthorize will prevent the Ex-Im Bank from extending new loans, which would be a win for taxpayers who are ultimately on the hook for a total of $140 billion if bank reserves fail to cover defaults.

The Ex-Im Bank is one of the most destructive government-granted privileges.

  • At a 40 percent share of total Ex-Im Bank loan authorizations in 2014, Boeing dwarfs the 25 percent combined share of all small businesses. On the foreign side, the subsidized financing largely benefits very large companies that either collect massive subsidies as state-controlled entities or could easily access private financing.
  • The Ex-Im Bank also gives lenders an incentive to shift resources away from unsubsidized projects and towards subsidized ones.

The Ex-Im Bank cannot affect the trade balance overall. Data shows the Ex-Im Bank backs less than 2 percent of U.S. exports each year.

  • The Gross Domestic Product of the country issuing the subsidies is very likely to be negatively affected.
  • Jobs will not vanish if the Ex-Im Bank charter expires. Economists have shown that in most cases schemes like the Ex-Im Bank redistribute jobs from nonsubsidized industries to subsidized ones.

The Ex-Im Bank is not really leveling the playing field for U.S. exporters or filling a financing gap. Data shows that less than one-third of the estimated export value of the Ex-Im Bank's portfolio is intended to counteract competitive disadvantages created by foreign governments' own export subsidies.

Source: Veronique de Rugy, "The Export-Import Bank: Winners and Losers of Government-Granted Privilege," Mercatus Center, June 2, 2015.

 

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