Should the Export-Import Bank be Shut Down in 3 Years? (H.R. 1910)
Do you support or oppose this bill?
What is H.R. 1910?
(Updated December 6, 2019)
This bill would abolish the Export-Import Bank in three years, and reduce the authorities of the Bank in the interim period. The Export-Import Bank was reauthorized in December 2015 through September 30, 2019.
Established in 1934 by President Franklin D. Roosevelt, the Export-Import Bank, is self-described on its website as:
"The official export credit agency of the United States. EXIM is an independent, self-sustaining Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services ... When private sector lenders are unable or unwilling to provide financing, EXIM fills in the gap for American businesses by equipping them with the financing tools necessary to compete for global sales."
Basically, the bank guarantees loans for customers abroad buying U.S.-made goods who otherwise would not take the commercial or political risks.
This bill would keep the Export-Import Bank from accepting new applications 30 days after it passes. One year in, the bank could no longer renew or enter into contracts. At the end of three years, the Bank’s remaining functions would be transferred to the Department of the Treasury — which at that point would be limited to loan repayment and oversight. The Export-Import Bank’s Office of the Inspector General would be abolished along with the Bank, and the Department of the Treasury would also take over ongoing audits, investigations, inspections, and reports.
The Secretary of the Treasury would be responsible for winding down the Bank’s operations, and have the authority to delegate tasks, transfer assets and personnel, enter into contracts, and employ experts to aid in those activities. Once all of the Bank’s obligations expire, the Treasury’s authorities would expire as well, and the Secretary would notify Congress.
Assets and funds that are currently available to the Bank could continue to be used for the three years, and existing savings provisions would be in effect until the Bank is finally terminated.
Argument in favor
The Export-Import Bank is nothing more than taxpayer-backed corporate welfare. Export subsidies — like those provided by the Ex-Im Bank — don’t create jobs, and only fuel an international subsidy bidding war.
Argument opposed
With many of our economic competitors subsidizing their exports, failing to follow suit through the Ex-Im Bank would cost the U.S. jobs and hit small businesses the hardest. In uncertain economic times, those are consequences we can’t afford.
Impact
Domestic and international companies that do business with the Export-Import Bank; the Export-Import Bank and its employees; the Department of the Treasury; Congress; and the Secretary of the Treasury.
Cost of H.R. 1910
A CBO cost estimate is unavailable.
Additional Info
In-Depth: Sponsoring Rep. Justin Amash (R-MI) introduced this bill to eliminate the Export-Import Bank:
“The Export-Import Bank is a prime example of Washington’s addiction to political cronyism. Instead of allowing businesses to compete in a free market, politicians pick winners and losers. Meanwhile, taxpayers assume the financial risk for the bank’s federally backed loans while a few corporations pocket the profits.”
FreedomWorks supports this bill. Its president, Adam Brandon, writes:
"[T]he Export-Import Bank Termination Act would abolish the Export-Import Bank, a relic of the New Deal and cesspool of cronyism. In a 1981 speech to a joint session of Congress, President Ronald Reagan noted that most of the recipients of funding from the Export-Import Bank were 'profitable corporations.' Unfortunately, not much has changed in the nearly 40 years since President Reagan gave that speech. The Export-Import Bank has earned the nickname 'Boeing’s Bank.' In FY 2014, for example, 68 percent of Ex-Im’s long-term loan guarantees and 40 percent of its authorizations went to Boeing. General Electric and Caterpillar were also among the top five of Ex-Im’s beneficiaries. While Ex-Im benefits these prominent American corporations, it does so at the expense of other American firms. By subsidizing exported products such as airliners, taxes on American-based airlines are used to subsidize their foreign competitors... The Export-Import Bank may be good for politically-connected businesses and K Street lobbyists, but it picks winners and losers in the marketplace at the expense of taxpayers. It’s time to send this relic of the New Deal to the grave."
The Export-Import Bank (or Ex-Im Bank) has been criticized as "corporate welfare" because several of the companies benefitting from its existence are among the largest corporations in the U.S. About 40 percent of the Ex-Im Bank’s 2014 authorizations benefited Boeing alone, and nearly two-thirds of the Bank’s 2013 money went to 10 U.S. companies, including General Electric, Caterpillar, and Ford along with Boeing. Of the $2.3 trillion that the U.S. exported in 2013, the Ex-Im Bank only approved $27.3 billion of loan guarantees — amounting to about 1.2 percent of the value of that year’s exports.
Proponents of the Ex-Im Bank point out that nearly 90 percent of the Bank’s total transactions involved small businesses, and in 2014 those transactions were valued at about $5 billion, making up around 20 percent of the total value of the Bank’s activity that year. It has also been noted by the Bank’s supporters that these activities supported over 160,000 U.S. jobs in 2014.
In 2015, John Murphy, vice president for international policy at the US Chamber of Commerce, explained that the Ex-Im Bank is particularly important for certain types of businesses:
"Particularly for expensive, long-lived capital goods such as aircraft, nuclear reactors, locomotives and earth-moving equipment, U.S. companies are bidding in competition with foreign companies that are backed by very generously funded export credit agencies of their own. Bids from all tenders must come with official export-import credit agency backing, which Ex-Im uniquely provides in the United States. So the bottom line in those cases is that without Ex-Im, U.S. companies aren't even able to bid."
This legislation has the support of nine Republican cosponsors in the House.
Of Note: In addition to doubts about the Ex-Im Bank’s benefits, it has been maligned for its cost — its price tag was estimated at $2 billion between 2015 and 2024 by the Congressional Budget Office.
Doubts about the long-term survival of the Ex-Im Bank date back at least as far as December 2011, when the White House drafted a contingency plan to be put into place if Congress failed to authorize the Bank’s appropriations during that budget cycle.
Media:
- Sponsoring Rep. Justin Amash (R-MI) Press Release
- Rep. Justin Amash (R-MI) Summary (Previous Version)
- FreedomWorks (In Favor - 116th Congress)
- CBS News
- Rare.us
- RedState
- Vox (Context)
- Congressional Research Service (Context)
- Wall Street Journal (Debate)
- National Review (In Favor)
- National Taxpayers Union (In Favor)
- Daily Caller (Op-Ed - Opposed)
- Americans for Prosperity (In Favor - Previous Version)
- Competitive Enterprise Institute (In Favor - Previous Version)
- FreedomWorks (In Favor - Previous Version)
-
Heritage Action (In Favor - Previous Version)
Summary by Eric Revell
(Photo Credit: Flickr user Tim Evanson)
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