Much has been made of Congress’ apparent inability to "get things done" over the past few years (their ability to continue spending vast quantities of our money aside). Those critics may be gratified to hear, then, that the House of Representatives can achieve a good policy result this year by doing what they’ve been accused of doing all along – absolutely nothing. This October 1st, if no bill is passed to reauthorize it, the Export-Import (Ex-Im) bank will be allowed to expire. Few will mourn its passing, save perhaps the handful of large corporations which receive the lion’s share of loans from Ex-Im, an 80-year-old New Deal program still in search of usefulness.
The very purpose of Ex-Im defies logic – its entire function is to provide loans to U.S. companies in order to facilitate their ability to export their products, but these loans must not be in competition with the free market. Basic economics should reveal the absurdity of this mandate: if companies can’t secure these loans in the market, then their projects must be too high-risk to fund. So taxpayers are being put on the hook for higher-risk projects so that foreign companies can buy our goods more cheaply.
In addition, the Ex-Im Bank’s loans flow very disproportionately to a small number of favored large corporations. As the Mercatus Center’s Veronique de Rugy has written, ten companies received 97 percent of Ex-Im’s loan guarantees in 2013 – led by giants Boeing, Caterpillar, and General Electric. These profitable titans of industry do not need taxpayers subsidies to export their goods.
Proponents of the Ex-Im Bank like to claim that the bank actually saves taxpayer dollars, but a May CBO report debunked those claims fairly thoroughly, finding that under fair-value accounting the bank will lose $2 billion. The supporters further claim that eliminating Ex-Im would cost thousands of jobs. This claim ignores the fact that subsidizing exports to foreign entities allows them to undercut domestic companies, which costs those U.S. companies profits and kills jobs.
Ideally, this wasteful program would be repealed altogether. Senator Mike Lee and Congressman Justin Amash have introduced a bill – the Export-Import Bank Termination Act – that would accomplish this goal, which FreedomWorks supports. In the short term, however, the Ex-Im Bank’s authorization is set to expire, meaning that Congress can stop the bank from issuing any new loans simply by doing absolutely nothing.
It should be the biggest no-brainer all year. Republicans and Democrats alike often claim to stand against welfare for corporations, and here’s there opportunity to act. Or not act, as the case might be.