“NO” on Export-Import Bank Reauthorization (Senate)
Today, the Senate could vote on the House-passed Export-Import Bank Reauthorization Act of 2012 (H.R.2072). The reauthorization would be for three years and expand 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-subsidized 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. The dynamic plays out internationally, too. Because exports are subsidized, the exported product can be sold cheaper to foreign buyers than domestic buyers. 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 the reauthorization of the ExIm Bank and will include it as a key vote on our scorecard.
Key vote was originally issued on March 14, 2012.
Heritage Action’s Scorecard
Key Vote Alert: “NO” on Export-Import Bank Reauthorization (House)
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