The Export-Import Bank is a subsidy organization. The federal government guarantees the loans made by foreign banks to foreign importers of American goods. If the importer defaults, the U.S. government bails out the foreign lender.
This allocates capital away from profit-seeking firms to government-protected firms.
The standard defense is thus: “This costs the government nothing . . . most of the time.” It should cost the government nothing all of the time.
Another defense: “It creates jobs.” What does? “The loans.” Why were the guarantees needed? “Because there was risk.” Why should taxpayers bear this risk? “Because America needs jobs.” Why not let lenders decide which jobs to create, in terms of risk and reward? “Because there is too much risk at the low interest rate.” So, the interest rate is fake. “Yes.” Then other companies must pay more for their loans. “Yes.” Why is that a good deal? “It’s a good deal if your company gets the guarantee.”
Boeing got 80% of the Ex-Im guarantees last year.
Nice work if you can get it. And if you get it, tell me how.
