Thursday, August 13, 2015

Export / Import Bank : Congress Debates A Failure

Why is it that the good news about the Export / Import bank relative to the bad news, is very weak? And yet the Senate approved the renewal? Who's running the show here? Republicans? What's happening here?

EXIM Charter Renewal Up For Congressional Debate
Source: Gene Lattus, "The U.S. Export-Import (Exim) Bank: Reauthorization Debate," National Center for Policy Analysis, August 11, 2015.

August 12, 2015

The U.S. Export-Import bank is the official U.S. export credit agency, financing the purchase of U.S. manufacturing exports by foreign governments and companies when private lenders are unavailable or unwilling. On June 30, 2015, the bank's charter expired. A possibility for renewal of the bank remains and debate in congress is likely, says research associate Gene Lattus at the National Center for Policy Analysis.

The bank's 2014 operations included:
  • Authorization of over 3,700 transactions.
  • Outlays of $20.5 billion in total benefits. 
  • A cumulative exposure portfolio of $112 billion.
Effects on U.S. Employment. According to its 2014 annual report, the bank's financing supported 164,000 U.S. jobs and a cumulative total of 1.3 million jobs since 2009. Opponents say the bank creates jobs in specific areas but, overall, merely redistributes jobs across the economy without creating more employment overall.
Impact on the U.S. Economy. Exim-financed exports accounted for only 1.6 percent of all U.S. exports in 2013.  Proponents say most exports do not need financing help. They argue that other countries distort market competition and the United States needs to offset these interventions.  It is also considered by some to be corporate welfare or "crony capitalism." Opponents argue only a few large corporations receive the bulk of Exim financing.
International Competitiveness. Many countries operate export credit agencies. According to Exim Competitiveness Reports, foreign export financing has been decreasing among OECD members, but activity has increased among non-OECD members.
Financial Risk for Taxpayers. The U.S. Exim is backed by the full faith and credit of the United States; translation: U.S. taxpayers. The bank's total loans outstanding increased 48 percent from 2008 to 2014, to $112 billion.
Exim operations could lead to further debt and further reliance on the government. In the event of an international economic crisis leading to widespread defaults, it could eventually present a large bill to U.S. taxpayers.
 

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