The Export-Import Bank is a government agency which is responsible for aiding in the export of American goods and services. They accomplish this by employing a number of programs including loans, guarantees and insurance. The Ex-Im Bank is supposed to engage in these activities in a way that doesn’t harm American corporations or produce job losses, yet that is exactly what they are doing.
The Ex-Im Bank is distorting marketplaces in its use of taxpayer-backed subsidies, which oftentimes benefit foreign companies and penalize American employers. It is in essence providing the U.S. Government with the power to pick winners and losers, a direct contradiction to a free market, and in fact, a complete manipulation of it.
Unfortunately, in recent years, Congress has not held them accountable, and they have been allowed to operate freely. In fact, according to a 2007 Government Accountability Office (GAO) report there were “challenges and areas for improvement in the screening and detailed analysis of projects for economic impact.”
The Ex-Im Bank is helping certain companies increase their profits at the expense of other American companies. Ex-Im can only finance foreign customers, meaning it can assist Boeing in the sale of its airplanes to foreign airlines at subsidized rates, but not to American airlines. As a result, foreign airlines can now purchase new planes for a lower cost than their American competitors, crippling American companies in the global air transportation market.
George Will wrote recently in a March 16 column titled, “Export-Import Bank’s Damage to American Firms” that “picking American winners, the Export-Import Bank creates American Losers.”
He wrote, “The bank, whose current reauthorization expires May 31 and which two months before that might hit the $100?billion cap on its loan exposure, subsidizes myriad export transactions with guaranteed loans to make U.S. exports cheaper. Mission creep is a metabolic urge of government agencies, but there may be mission gallop at the bank as it tries to correct the collateral damage it does to some U.S. companies and as it is pushed to further politicize credit markets by mirroring the market-distorting policies of foreign governments.”
In an age of bloated government and record debt and deficits, is the practice of picking winning and losers in a free market economy what America needs? Is the practice of seeing whether the United States or Europe can artificially subsidize their exports to a greater degree ensuring fairness, competition and commerce is protected in the marketplace?
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