Export–Import Bank: Cronyism Threatens American Jobs

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By Diane Katz,

from Heritage Foundation,

The Export–Import Bank (Ex–Im) funnels billions of taxpayer dollars each year to overseas businesses for the purchase of American products. This subsidized financing is supposedly a win-win proposition for exporters and their customers abroad. But rare is a subsidy that does not produce disparity elsewhere. In the case of Ex–Im, the losers include domestic companies that are left to compete against foreign firms bankrolled by the U.S. government.

This and other drawbacks of Ex–Im are important to acknowledge as Congress considers whether to reauthorize the bank before its charter expires on September 30. The decision should be an easy one. Ex–Im effectively ignores the impact of its actions on American workers, as well as the risks to taxpayers, while exaggerating the benefits of those actions.

Government authorities have documented a variety of problems with bank operations,[1] but the fact that Ex–Im financing handicaps at least some American businesses is sufficient reason to end it. Recently, for example, the bank approved $694 million in financing for U.S. equipment to develop an open-pit iron ore mine in Australia (owned by the country’s richest woman).[2] The deal was consummated despite warnings from the United Steel Workers, the Iron Mining Association, and all four Senators from Minnesota and Michigan that the subsidies would jeopardize thousands of U.S. mining jobs.[3]

Global trade benefits the U.S. economy, but Ex–Im subsidies confer a competitive advantage to a select group of favored firms. Rather than perpetuate this cronyism, Congress should allow the bank’s charter to expire and undertake tax and regulatory reforms that would strengthen the competitive position of all U.S. businesses.

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