The End of the Export-Import Bank?
Ex-Im subsidizes U.S. exports, but it’s unnecessary and there’s a move to shut it down.
Once upon a time, it may have seemed like a good idea: The government created a financial institution designed to provide and backstop financing for companies from around the world wishing to import American products. Known as the Export-Import Bank, or just Ex-Im, it was created by President Franklin Roosevelt in 1934 by executive order and its first dealings were with the former Soviet Union. While its record of achievement has improved somewhat over the years, it was described by a certain 2008 presidential candidate as “little more than a fund for corporate welfare.” Barack Obama was right.
But he stood by as the bank was reauthorized in 2012 – no doubt hoping to gain the support of Boeing’s thousands of union employees, as the company was the beneficiary of 83% of its loans for fiscal year 2012.
Finally, some members of Congress are beginning to question the bank’s existence as a blatant example of “corporate welfare” and cronyism so in vogue today. Writing at the Heritage Foundation’s The Foundry blog, Sen. Mike Lee (R-UT) described Ex-Im as “another taxpayer-funded example of distorted public policy that further erodes Americans’ confidence in our markets and our system.” Lee argues that most of Ex-Im’s beneficiaries can easily secure credit through other means without putting taxpayers on the hook.
So the debate will begin this summer, as the Ex-Im Bank will have to be reauthorized by September to continue operations. Yet lining up on the side of maintaining the government trough will be a number of large exporters and the manufacturing sector in general who will surely argue the Ex-Im Bank is a job creator because it subsidizes American workers by making their products affordable around the world. The three largest Boeing contracts in 2012 went to airlines in Ethiopia, Chile and Hong Kong. Chances are at least one of the three wouldn’t have been possible without the government backstop, but at a time when the nation is already trillions in debt, the gravy train needs to stop somewhere. Which is precisely why it probably won’t be stopped. After all, Democrats need all the union support they can get this fall.
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