This article explores the upcoming potential reauthorization of the U.S. Export-Import Bank (Ex-Im) on the 30th of September this year. Author Diane Katz calls for an end to the bank’s existence on behalf of the taxpayers who make this institution possible.
According to Katz, Ex-Im is a “Depression-era relic,” that has become unnecessary due to the greater availability of private export financing. Like most government-run programs, this bank is inefficient and exercises careless risk management for which American taxpayers suffer by paying for losses that occur. Supporters of Ex-Im claim that it “levels the playing field,” of global business but Katz points out that only 2% of American companies in 2013 received Ex-Im assistance. Billions of taxpayer dollars are being used to fund Ex-Im and Katz believes Congress should vote for its removal.
I agree with Katz that the Ex-Im bank should be voted out in September. While the bank may have been useful at its inception, today financing for exporting is more available than ever as the practice of exporting has become as common as over-the-counter transactions. The financial risk of exporting should be placed entirely on private investors, not taxpayers. To illustrate my reasoning, think of the difference between how a person drives their own newly purchased vehicle and how they drive a rental car. The person driving the car to which they hold the title often is careful and more calculated in their driving decisions. The person driving the rental is more inclined to take careless risks driving faster, longer, and more aggressively because it’s not their car. Likewise companies take greater risks with government loans that are backed in “full faith and credit” by taxpayers. When companies are driving their own cars, so to speak, that is they finance exporting through private investors, they take more calculated and cautious risks knowing they will be held accountable for mistakes. Ex-Im also supposedly levels the playing field of global business, but this isn’t true because only 2% of American exporters are benefiting from this bank and 98% of companies are managing to do business without them. Katz asserts that Ex-Im officials assume that today’s economic activity wouldn’t be possible without their financing. She says this notion is typical of bureaucrats, “who can’t fathom that business actually functions without them.” Moving beyond this, taxpayers shouldn’t be lending money to business start-ups to being with, especially because those primarily benefiting from Ex-Im loans are large multi-national corporations. Supporters of Ex-Im would like us to imagine this bank making a little bakery owner’s dreams come true by providing needed financing for exporting cupcakes, but in reality the picture looks more like McDonald’s approaching me, the taxpayer, for a loan. This is absurd! It is my opinion that government interference in trade will have primarily negative results. It is important to me that, in light of the recent financial crisis, there be a greater accountability in money lending. I am disturbed that Ex-Im recklessly invests my tax money in propositions that have risk levels most private investors would label as unacceptable. Congress should drive this outdated and rusty old bank to the junk yard and scrap it.