During his campaign, President Trump characterized the Export-Import Bank (Ex-Im) as “unnecessary” and likened it to “featherbedding for politicians.” The Ex-Im, a federal agency which provides taxpayer backed financing to foreign businesses and governments, has for the last two years been in a state of limbo because Republicans refused to confirm nominees to the agency’s board. This has left it exactly one board member shy of the three needed to approve transactions in excess of $10 million.
Earlier this month, the president announced his nomination of two former congressmen to fill positions in the Ex-Im: Scott Garrett, to serve as the bank’s president, and Spencer Bachus, to serve on the agency’s board of directors. These nominations, especially Garrett’s, demonstrate the president’s resolve to thoroughly reform the Ex-Im. If the Senate confirms Bachus and Garrett, the agency will once again function without impediment.
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Throughout his campaign, Donald Trump promised to revolutionize trade policy for the benefit of American workers and industry. He should begin by stopping the Export-Import Bank from purveying corporate welfare.
Ex-Im is a federal agency established to help American exporters by providing taxpayer-backed financing to governments and businesses in developing foreign markets without access to the necessary means to buy American products. In its youth, Ex-Im did just that and bolstered exports in the interwar period to Cuba, Haiti and Burma. Over the last 50 years, though, it has ventured far from its original purpose and has become a vehicle for ruinous market distortion.
According to the Mercatus Center, some of the largest beneficiaries of Ex-Im financing are companies like Boeing, Bechtel Power, General Electric and Caterpillar — all multinational conglomerates that could conceivably get financing directly from private lenders.
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On Tuesday, the House of Representatives voted—with the support of nearly all Democrats and a slim majority of Republicans—to reauthorize the Export-Import Bank, or “Ex-Im” for short. The credit-granting agency has been closed since June, when its charter expired. Bipartisanship is unusual these days, yet Washington can agree on supporting a program that leaves ordinary Americans as the losers. The Ex-Im Bank is corporate welfare at its finest.
The Ex-Im Bank provides subsidies to foreign customers of American companies such as Boeing and Caterpillar. Supporters of the Bank argue that it is beneficial to our trade balance, but over 98 percent of American exports do not depend on Ex-Im, and the 2 percent that do would likely be able to find financing elsewhere. As the research of the Mercatus Center’s Veronique de Rugy has shown, the Bank “fails to promote exports, create jobs, or support small businesses.”
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