10-Point Expert: The Export-Import Bank

Export Import Bank Logo

There aren’t many issues that fundamentally separate politicians within the same party like the Export-Import Bank. Oh please!! Don’t go pretending like you know what it actually is!  

 

 

In the last two Democratic debates, an important issue started to surface that has put both Hillary Clinton and Bernie Sanders on opposite sides.

 

 

Yup, they’re talking about the Export-Import Bank! If that term “Export-Import Bank” sounds familiar, that’s because last year there was much debate over the Ex-Im Bank on whether the federal government should continue to support that specific credit agency or not. While eventually it did get its charter reauthorized, there was a six month period in which it had lapsed due to fierce debates within both Democratic and Republican Parties in Congress.

 

So what is the Ex-Im Bank? We’ll explain it the best we can in this 10-Point Expert.

 

 

Point 1: The Ex-Im Bank is a government credit agency created in 1934 to facilitate the trade of domestic exports in various actions which include:

  • financing the purchase of domestic exports from the US

  • providing guarantees for the foreign buyers by promising insurance against risk

 

Point 2: In laymen’s terms, if you make trash cans in the US and there is a foreign buyer interested in buying said trash cans, the Ex-Im Bank will help that foreign company buy trash cans from you through loans in which the Bank provides. That way it encourages the foreign buyer to buy trash cans from the US (by reducing their monetary risk), but also encourages international trade from US companies.

 

Point 3: The Ex-Im Bank’s margins are impressive! In 2013 alone it overlooked $27 billion in international trade, while making shrewd enough loans to generate $1.1 billion in profits. Because of this, the Ex-Im Bank is essentially a self-sustaining government entity.

 

Cargo

For the Ex-Im Bank, this might as well be that money vault from DuckTales in which Scrooge McDuck goes swimming in!

 

Point 4: As we talked about in the earlier points, the case for the Ex-Im Bank is pretty clear. Proponents of the Ex-Im Bank insist that it encourages foreign companies to buy US based exports in which it spurs healthy international trade for the US. They even go further in saying it creates millions of private sector jobs within the US economy.

 

Point 5: Ex-Im Bank themselves are quick to point out that in 2015, 90% of the Bank’s transactions directly supported small businesses, claiming that it gives these businesses protection to tackle international market.

 

Point 6: But as much as Ex-Im Banks has its supporters, there are a fair amount of dissenters as well. Opponents of the Ex-Im Bank claim that the numbers thrown around by the Bank is actually inflated due to Fair-Value Accounting (a measure that the federal government uses as their interest rate, which tends to be lower than what private sector estimates their rates at). However their biggest complaint stems from the fact that all the Ex-Im Bank does is create an environment where business relationships between the private sector and big government hinders the free-market. Their claim essentially boils down the Ex-Im Bank as a government agency providing big businesses with an unfair advantage which crushes smaller American firms trying to enter similar space.

 

Point 7: For most opponents of the Ex-Im Bank, they site the case of Boeing as the prime example in which a big corporation has an unfair advantage over smaller firms, in terms of international trade. Boeing is currently one of the biggest US exporters today and has strong ties with the Ex- Im Bank in terms of exporting airplane parts to international buyers. Critics claim Boeing’s ties to the Ex-Im Bank creates an unfair advantage over smaller US firms that may want to trade internationally but can’t due to the Ex-Im Bank’s backing. In some Washington circles, the Bank has been referred to as the “Bank of Boeing.”

 

Boeing Logo

Pictured: Welfare Queen

 

Point 8: Now here’s where things get weird… As you might have suspected, many far-right Republicans (ie Tea Partiers) oppose the Ex-Im Bank calling it “crony capitalism” over the federal government’s intrusion on international trade. Yet there are some Republicans who also support Ex-Im Bank saying that it’s essential in job growth and for the US to be competitive in international trade.

 

Point 9: The Ex-Im Bank also divides Democrats, as you can see from the earlier Bernie Sanders and Hillary Clinton clip. Democrats like Clinton (and even left-leaning Democrats like Elizabeth Warren) insist the Ex-Im Bank stimulates job growth in the US due to a stimulus in international trade. But that isn’t to say that there aren’t a handful of Democrats like Sanders who believe the Ex-Im Bank creates “corporate welfare” to major corporations like Boeing. Strangely enough, this puts Democrats like Sanders on the same side with Tea Partiers over the issue!

 

Point 10: So overall is the Ex-Im Bank good government policy? Well… like most government policies, the Ex-Im Bank is a mixed bag of positives and negatives. Even the most ardent opposition admits that the existence of the Ex-Im Bank helps spur international trade from US companies and creates job opportunities within the country with its existence. However, it’s also easy to see how a company like Boeing uses Ex-Im Bank as a stronghold on certain markets, creating in some cases, an unfair advantage. Whether you’re for or against the Ex-Im Bank completely depends on what aspects you value more from the Bank’s existence.

 

 

(Photo Credits: Google Images, Pixabay.com, Boeing.com)

 

5 Comments

Filed under Features, TPT Originals

5 Responses to 10-Point Expert: The Export-Import Bank

  1. Kath

    thanks for explaining the export import bank, been wondering what it actually was for a while now.

  2. Anonymous

    While I think it was a strong explanation of the Exim, I also think the author gave too much credit to those who are against Exim. If the US didn’t have Exim, they’d be at a huge disadvantage. Almost every country that is serious about trade has an Exim.

  3. Anonymous

    I’ll be honest, I had no clue what the Export-Import Bank was. 😛

  4. Patrick

    Great piece on Ex-Im Bank, thanks for clearing all that up!

Leave a Reply

Your email address will not be published.