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Proponents of the Export-Import Bank claim that the bank’s issuance of loans and guarantees to large companies is essential to international competitiveness and a thriving American economy.
According to a new study from the Mercatus Center, that claim isn’t true.
While the Senate confirmed new directors — which are necessary to approve massive loans — to the Ex-Im Board this month, the bank has been run smoothly without a full board since 2015.
For several years, it operated with significantly curtailed powers.
Americans got along just fine without it. That’s because it isn’t essential to economic growth. The usual recipients of the Ex-Im Bank’s loans — 65% of their financing went to just 10 companies in 2014 — haven’t suffered from the bank’s shrunken stature. Those companies, such as Boeing and General Electric, have found private financing options.
In the meantime, the bank’s risk exposure was cut nearly in half between 2013 and 2018, from $116 billion to $66 billion. This was beneficial for taxpayers. There’s no reason they should be on the hook for funding America’s most successful companies.
The bank has also significantly reduced its financing for foreign companies, many of whom are already subsidized by their governments.
Some countries, such as China, Mexico and Russia, received billions of dollars in financing from 2007 to 2014. For the past few years, the Ex-Im Bank had been limited in ability to dole out corporate welfare for the world’s biggest businesses.
The results are promising.
Our exports haven’t collapsed — they’ve risen, from $1.7 trillion in fiscal 2014 to $1.8 trillion in fiscal 2018. Our economy is strong, in part thanks to the Trump administration’s Tax Cuts and Jobs Act of 2017. Put simply, we don’t need the Ex-Im Bank to keep American businesses afloat.
Now that the Ex-Im Bank’s lack of utility has been exposed, lawmakers should refuse to reauthorize its charter. America’s businesses deserve a fair playing field, free of cronyism and corporate welfare.
The government has no business picking winners and losers in the marketplace. Companies should be free to succeed on their merits, principally by creating value for their customers, rather than seeking government handouts. What’s more, American taxpayers have no business absorbing the massive risk for loans to companies that simply don’t need them to thrive.