“NO” on Export-Import Bank Reauthorization (House)
This week, the House of Representatives is expected to vote on the Export-Import Bank Reauthorization Act of 2012 (H.R.2072). The bill will reauthorize the federal Export-Import (ExIm) Bank, which dates back to 1934, for three years and increase the bank’s lending cap by 40%, to $140 billion. Without a reauthorization, the bank’s legal charter will expire on May 31, 2012.
The ExIm Bank provides taxpayer-backed loans to U.S. exporters under the auspices of increasing exports, but according to Wall Street Journal, ExIm’s contribution to increasing exports is “negligible.” As is the case with any subsidy, taxpayer-backed loans result in market distortion and crony capitalism. Exporters jockeying for low-cost loans, and those that receive the loans have an advantage over their domestic competition. While H.R.2072 purports to minimize these distortions, the fundamental dynamic of market distortion remains.
Not only does ExIm impose significant indirect costs on the economy, it runs the risk of costing taxpayers. According to the bank’s mission statement, it “assume[s] credit and country risks that the private sector is unable or unwilling to accept.” An increase in the bank’s lending cap will increase taxpayers’ exposure to bad loans; and in the era of Solyndra (which received taxpayer support from ExIm) the risk cannot be understated. The ExIm Bank is properly viewed as the Fannie Mae for exporters: expanding its high-risk business while claiming low-risk.
Although the House ExIm reauthorization does contain some minor tweaks and reforms, it does not change the nature of the taxpayer-backed bank, nor does it begin the process of winding down the bank’s intervention in our economy. Simply put, the ExIm Bank should be eliminated, not extended and expanded.
Heritage Action opposes H.R.2072 and will include it as a key vote on our scorecard.
Key vote was originally issued on March 12, 2012 in reference to the “Securing American Jobs Through Exports Act of 2011.”
Heritage Action’s Scorecard
ExIm Bank: The Fannie Mae for Exporters
The Washington Establishment’s Big Problem
Corporate Welfare Gets New Life
Heritage: Fannie Mae for Exporters Leaves Taxpayers Holding the Bag
WSJ: The Export Subsidy Boomerang