How the Ex-Im Bank Enables Cronyism and Wastes Taxpayer Money: Why Congress Should Pull the Plug on this Wasteful Agency

Abstract

The U.S. Export-Import Bank (Ex-Im) is a federal agency that seeks to boost exports by private U.S. businesses. It pursues its mission through loan guarantees, direct loans, reinsurance, and other financial products. Unlike most agencies, Ex-Im will close if it is not periodically reauthorized by Congress. Its current authorization expires on September 30, 2019. In July 2019, Sens. Kevin Cramer (R-N.D.) and Kyrsten Sinema (D-Ariz.) introduced a reauthorization bill to keep Ex-Im open through September 30, 2029. Ex-Im recently emerged from a nearly five-year period of reduced activity, including an authorization lapse of nearly a year. Over the period 2014-2018, this resulted in total savings to taxpayers of $47.9 billion, or nearly $12 billion per year. A nearly $52 billion reduction in Ex-Im’s total portfolio over this period reduced taxpayer exposure by an average of just under $13 billion per year. These are enormous figures for an agency with a $135 million FY 2018 budget—of which it spent only $60.5 million due to reduced activity. The Export-Import Bank should be closed for a number of reasons, including internal corruption, corporate rent-seeking, and economic inefficiency. This paper, while it urges Ex-Im’s closure as the best policy option, will focus on second-best reforms, given the likelihood that Ex-Im will be reauthorized. The Bank has bipartisan support—especially from the congressional delegations from Washington State and South Carolina, where Boeing has major manufacturing facilities—and President Trump has indicated support for Ex-Im as part of his trade agenda.