Ex-Im Bank Produces Billion-Dollar Profit, Making Critics Look Foolish

This week the federal government’s Export-Import Bank once again discredited the complaints of its most strident critics by sending a billion dollars it didn’t need to the U.S. Treasury. The money was left over from fees it charges users of its credit programs after the agency covered its costs of operation. That means Ex-Im (as it is frequently called), not only doesn’t cost taxpayers any money, it actually gives money back to taxpayers in the form of payments that help reduce the budget deficit.

You’d never know that to listen to critics, who complain Ex-Im programs are a form of “corporate welfare” because they help companies to sell U.S.-made goods overseas. But Ex-Im only supports sales to countries like Ethiopia and Pakistan that can’t get credit through commercial sources, and it makes them pay fees for access to its programs. Every other major trading nation in the world operates an export-credit agency to facilitate trade, and Ex-Im is nearly unique in the limits imposed on how it operates. Countries like China are much more indiscriminate in extending credit to help their exporters compete against foreign rivals.

Despite all the constraints on its activities, Ex-Im supports $50 billion in U.S. exports, sustaining a quarter of a million domestic jobs. It is crucial to the success of big exporters like General Electric and Boeing (the nation’s biggest exporter), and yet the majority of its transactions support small businesses. Ironically, one of those small businesses is the family-owned company of the former congressman who heads the Club for Growth, a frequent critic of Ex-Im programs. Another frequent critic, Delta Airlines, recently accepted hefty export credits from Ex-Im’s Canadian counterpart to buy jets built north of the border. It appears these critics only oppose export credits when other people receive them.

There is a great deal of mythology surrounding the hands-off role that government supposedly took towards business in America’s misty past. Many industries such as railroads, computers and shipbuilding emerged when they did in large part because of federal subsidies. Other countries have noted the success of that practice, and today use their export-credit agencies to help subsidize infant industries. The irony of criticizing Ex-Im is that it doesn’t even hand out subsidies, it charges fees and generates profits in return for supporting exports — and only when commercial credit is unavailable. If this is un-American, then maybe we ought to ask ourselves when it became patriotic to stop competing on a level playing field in foreign markets.