The charter for the Ex-Im bank expires on September 30 of this year. Congress must decide whether to continue the bank or not. Here are a few reasons why the Bank must go:
1. Cost: Accounting gimmicks and lofty assumptions hide the real costs the Export-Import Bank poses to taxpayers. While the Bank's authorization dropped to just under $30 billion last year, the amount of risk assessed for the Bank's activities has steadily grown. According to Veronique de Rugy at the Mercatus Center, the risk to which taxpayers are exposed amounted to $114 billion last year. What's more, the Congressional Budget Office tells us that if the Bank's activities were gauged using realistic projections, it would end up costing taxpayers $2 billion over the next ten years.
2. Our government likes to gamble: So long as taxpayers are on the hook for the costs, proponents of the Bank argue it fills a critical role by supplying financing that the private market has deemed too unsafe to undertake. Unbelievably, the Bank's charter actually directs it to take on risky projects in untested sectors, such as dubious green energy ventures. These narrowly tailored directives illustrate that Ex-Im serves to bankroll political agendas, not fill a vacuum in the free market.
3. Racing to the bottom on bad economic policy: That foreign governments leverage their citizens' tax dollars to manipulate export markets does not make it sound economic policy for the United States to do the same. Academics and government scorekeepers such as the Government Accountability Office and Congressional Research Service have stated that export subsidies may promote activity in the privileged sectors that receive support, but do little to increase overall production in the economy.
4. All together, Ex-Im is NBD: In total, the Bank plays a role in approximately 2 percent of all American exports. This belies the argument that the bank itself represents a critical component for maintaining U.S. competitiveness in export markets.
5. Hitting American workers when they're down: By enticing buyers with sweet financing deals, the bank lowers the cost of capital for foreign firms, allowing them a competitive advantage in the global economy. Laboring under the highest corporate tax rate in the developed world, businesses in the United States already face extraordinary barriers to creating and expanding job opportunities. American workers will face fewer opportunities as long as their tax dollars are used to slant the deck in favor of foreign multinationals.
6. It is a myth that the bank helps small businesses compete against the titans of industry. The miniscule role the Bank plays measured against the entire universe of U.S. exports shows the benefits of the bank are isolated. Data from the Mercatus Center shows that a whopping 76 percent of the Bank's activities directly benefit fewer than ten well-known corporations. In fact, a CRS analysis in 2011 showed that 60 percent of the Bank's funding went to one firm. Meanwhile, research shows that Ex-Im financing goes to less than .04 percent of small businesses.
7. Rife with corruption: the business of doling out taxpayer-funded sweeteners is a lucrative one. This summer, several Ex-Im employees were removed for allegedly accepting kickbacks or working to influence contracts for well-connected companies. The concentration of the Bank's activities in certain industries and amongst specific beneficiaries is suspect. Perhaps worse, there exists no consistent and transparent accounting of how contracts are awarded. Institutions that exist to promote the collusion between Big Government and Big Business are always a bad deal for taxpayers.