Supporters argue that Ex-Im Bank is necessary because it extends loans to firms when the privatesector is unable or unwilling to do so. However, evidence that shows that subsidizing exportsdoes not lead to job growth. According to the Congressio
nal Research Service, there is “
littletheoretical support or empirical evidence that supports claims that subsidizing exports oroverseas investment offers a positive net gain in jobs to the U.S. economy.
“That assertion flies in the face of the claim that the bank only invests in ‘sure bets’
d that taxpayers’
money is safe,
Cato Institute policy analyst Sallie James points out.
If aparticular project were truly a sound investment, then entrepreneurs and investors would takerisks and bear the cost burden
. Hardworking taxpayers’ money wouldn’t be necessary. If a
project were too risky to find credit in the private sector, then the Ex-Im Bank puts taxpayermoney in too much risk.On the contrary, there exist no apparent impediments that could lead to market failure (i.e.,natural monopolies, externalities,
information asymmetry, missing “infrastructure”
of marketprocesses, policy impediments to markets). It is not clear from the application
what “compelling public need,” or “material failures of private markets” justifies the proposed requirements.
Considering all this, AFP disagrees that the acceptance of this application would be consistentwith the Executive Order 12866 Regulatory Philosophy.
The Ex-Im Bank has nicknames that connote what it really does
—it’s called “
a corporate welfareslush fund
the Fannie Mae for exporters
and the “Boeing Bank.” Even President
Obamasaid the b
ank was “little more than
a fund for corporate
welfare,” when campaigning for
president in late 2008. Indeed, the Ex-Im Bank embodies the practice of allowing the federalgovernment to attempt to subvert the market by picking winners and losers. It gives money to asmall number of politically-connected companies and industries, and then passes the cost ontotaxpayers.The biggest beneficiary by far is Boeing, which is the domestic beneficiary of this particularapplication. The Boeing Company received 44 percent of the total loans and long-termguarantees that Ex-Im Bank extended in FY2010. Last year alone, Ex-Im Bank provided morethan $11.4 billion to foreign airlines to purchase Boeing airplanes.AFP is strongly opposed to the practice of using taxpayer resources to prop up particularcompanies or industries. Firms should compete on a playing field that favors none of the players.
James K. Jackson, "OPIC: Employment and Other Economic Effects," Congressional Research Service
Report for Congress
, May 23, 1997.
. (March 14, 2012) “
Expanding Ex-Im's Mandate Is A Big Mistake
Free Trade Bulletin no. 48.
Tim Carney. Washington Examiner. <http://washingtonexaminer.com/politics/beltway-confidential/2011/03/john-kerry%E2%80%99s-%E2%80%98infrastructure-bank%E2%80%99-corporate-welfare-slush>