My friend John Graber has just published an article opposing the reauthorization of the ExIm bank. I understand his frustration. I am not a fan of corporate welfare, and in a perfect world the ExIm bank would not exist. But this world is not perfect. The simple fact is, the ExIm bank is an important part of our economy, and not authorizing it would be a big mistake.
(1) Is ExIm corporate welfare?
To a degree, yes. Any subsidization, to businesses big or small, is corporate welfare. But Graber, citing former Democratic Representative Dennis Kucinich and Republican Representative Jim Jordan, describes the ExIm bank as "slush fund for a handful of well-connected megacorporations." This is simply untrue. In fact, 89% of ExIm authorizations went to small businesses.
It is true that large companies receive more money from ExIm than do smaller businesses, but this statistic is meaningless. Big companies have different needs than small ones. Larger companies have much larger projects that they need to be funded.
So, technically the answer is yes, but small businesses benefit just as much--if not moreso--than larger companies using ExIm loans.
(2) ExIm too small to help economy? Does it hurt it?
Graber argues ExIm support helps only about 2% of trade, and of that help, it all goes to big corporations. For this reason, ExIm doesn't help the economy, and it may hurt it. This is not true.
As I already noted, ExIm benefits many small businesses; but, the claim that ExIm is too small is a weak argument. ExIm is not meant to be a large part of trade. It is supposed to operate on the periphery. According to the Lexington Institute, "Although Ex-Im credit only supports a small share of U.S. exports, it has a disproportionate impact on job creation and GDP growth due to the leverage it gives exporters." Indeed, the report discusses how ExIm has drastically benefited Boeing. While foreign companies have ExIm-like banks much larger than ours, and benefit from other subsidies, the small amount of help ExIm provides to them drastically increases their staying power. Graber points to airline industries suffering under ExIm, but Boeing has hugely benefited. His job loss statistic is simply cherry picking and fails to look at the whole picture. If job growth is taken into account--job growth in industries that benefit from ExIm--the Lexington Institute notes that 20,000 jobs have been saved because of ExIm. This outweighs the 7,500 losses Graber points to.
As foreign companies benefit from their foreign governments' subsidies and similar export banks, abolishing our own would actually make it a lot worse.
ExIm is necessary for trade
According to the American Action Forum, "27 countries require support from an export credit agency before even considering a bid for a project from an American company. Those countries account for 40 percent of the world’s population and over 10 percent of global GDP. Without Ex-Im, U.S. companies can’t compete for project contracts in these countries, and that takes a huge toll on business."
Abolishing the ExIm bank would significantly reduce US exports.
ExIm isn't perfect. If other countries didn't have these types of banks, I would favor abolishing it. Unfortunately, ExIm is necessary for global competitiveness. With China spending 8 times more in export subsidies than our bank, abolishing ExIm would further endanger our industries.
(1) Is ExIm corporate welfare?
To a degree, yes. Any subsidization, to businesses big or small, is corporate welfare. But Graber, citing former Democratic Representative Dennis Kucinich and Republican Representative Jim Jordan, describes the ExIm bank as "slush fund for a handful of well-connected megacorporations." This is simply untrue. In fact, 89% of ExIm authorizations went to small businesses.
It is true that large companies receive more money from ExIm than do smaller businesses, but this statistic is meaningless. Big companies have different needs than small ones. Larger companies have much larger projects that they need to be funded.
So, technically the answer is yes, but small businesses benefit just as much--if not moreso--than larger companies using ExIm loans.
(2) ExIm too small to help economy? Does it hurt it?
Graber argues ExIm support helps only about 2% of trade, and of that help, it all goes to big corporations. For this reason, ExIm doesn't help the economy, and it may hurt it. This is not true.
As I already noted, ExIm benefits many small businesses; but, the claim that ExIm is too small is a weak argument. ExIm is not meant to be a large part of trade. It is supposed to operate on the periphery. According to the Lexington Institute, "Although Ex-Im credit only supports a small share of U.S. exports, it has a disproportionate impact on job creation and GDP growth due to the leverage it gives exporters." Indeed, the report discusses how ExIm has drastically benefited Boeing. While foreign companies have ExIm-like banks much larger than ours, and benefit from other subsidies, the small amount of help ExIm provides to them drastically increases their staying power. Graber points to airline industries suffering under ExIm, but Boeing has hugely benefited. His job loss statistic is simply cherry picking and fails to look at the whole picture. If job growth is taken into account--job growth in industries that benefit from ExIm--the Lexington Institute notes that 20,000 jobs have been saved because of ExIm. This outweighs the 7,500 losses Graber points to.
As foreign companies benefit from their foreign governments' subsidies and similar export banks, abolishing our own would actually make it a lot worse.
ExIm is necessary for trade
According to the American Action Forum, "27 countries require support from an export credit agency before even considering a bid for a project from an American company. Those countries account for 40 percent of the world’s population and over 10 percent of global GDP. Without Ex-Im, U.S. companies can’t compete for project contracts in these countries, and that takes a huge toll on business."
Abolishing the ExIm bank would significantly reduce US exports.
ExIm isn't perfect. If other countries didn't have these types of banks, I would favor abolishing it. Unfortunately, ExIm is necessary for global competitiveness. With China spending 8 times more in export subsidies than our bank, abolishing ExIm would further endanger our industries.
No comments:
Post a Comment