The Export-Import bank is an independent taxpayer funded agency that supports American businesses with their attempt to sell their products abroad. The Ex-Im Bank provides loan guarantees, insurance for foreign buyers, and credit lines for overseas purchasers. Essentially, the bank was put in place to support American small businesses export their products overseas. The bank has not been fully operational for several years due to the removal of board members in 2014. The bank should finally shut its doors, as it leads to corporate cronyism and does not put our taxpayer dollars to good use.
The agency invites corporate cronyism. Political leaders favoring certain corporations’ due to the influence of money is corporate cronyism. The agency has been caught funding unnecessary mega corporations such as Boeing, General Electric, and Caterpillar. There have been several investigations of kickbacks, gifts, and the giving to these favored companies. According to the Washington Examiner, 40% of financing goes towards Boeing in an average year. Boeing is a multibillion dollar corporation that can compete in a competitive global market without any help. It comes as no surprise, Boeing is one of the most influential lobbyists of the federal agency. In fact, Ex-Im authorized $40.5 billion in subsidies to airlines from 2007-2014. However, mega corporations do not need to use taxpayer dollars to aid their business. They simply do not need the extra assistance. This puts small business at a huge disadvantage. Small businesses do not have the funds to throw at political leaders in order to receive export subsides. Taxpayer dollars should be used for the original intention of bank, which, is to support small American business, not to boost the profit margins for large companies.
Taxpayer dollars are not being put to good use by the Export Import Bank. The bank claims taxpayers actually benefit from the bank, but is this true? The Bank’s annual report states it has created over 7 billion dollars in tax revenue for taxpayers since the 90’s. This sounds like a great service the bank is doing for us, however, the accuracy of bank’s finances has become mistrusted by auditors’ due to its lack of record keeping, risk analysis, and poor accounting methods. The inspector general states that the agency has not defined an accurate approach to identify risk to its lenders. In fact, the bank does not properly consider a foreign customer’s financial integrity or eligibility. Therefore, the bank is not diligent with our tax payer dollars.
Recently the Ex-Im bank has gained attention due to Trump’s recent appointment of Scott Garrett, to head the bank. Trump’s view of the bank has changed since the beginning of his presidency. Trump originally wanted to shut down the bank, since he believed that it brought more corruption to Washington. Scott Garrett, a former U.S. representative who initially voted against the reauthorization of the agency in 2014 due to its destruction of the free enterprise system is now in line to lead the bank. According to a recent report on the Whitehouse.gov, Trump now says the Ex-Im bank has the potential to bring great profits to the United States. Trump believes the bank can be successful if it is reformed. Trump should revert back to his original position on the Ex-Im bank. Politicians who say they are going to eliminate corruption should follow through on those intentions.
Corruption will always be present within the bank if it is left in Washington because companies like Boeing will always influence politicians with money. Boeing and similar companies alike do not need to rely on taxpayer funds because they can afford to provide customers with financing on their own. The bank claims to take away the financial risk from private businesses, but who truly bears the risk? The taxpayers do. As the Export-Import Bank’s transactions grow the taxpayer risk will increase. Consequently, the United States would operate just fine without The Export Import bank.
Kelly Walker is a student of Intermediate Microeconomics at the University of Central Arkansas. The column has been vetted by Joe McGarrity, a professor of economics at the University of Central Arkansas. Contact him by email at firstname.lastname@example.org .