In gathering to discuss the past and uncertain future of the US Export-Import Bank, we have a rare opportunity to reconsider the assumptions, mission, and activities of the federal government’s official export credit corporation ahead of the reauthorization vote. In order to make the best decision, however, policymakers must know all the facts.

Before delving into the weeds of export credit finance, there are two fundamental realities to keep in mind.

First, export promotion programs, like Ex-Im finance, are not critical to US exports. Second, the Bank’s mission is inherently contradictory.

First, Ex-Im yields a minuscule influence on US exports. At most, Ex-Im can claim to influence roughly 2 percent of both the value of total US exports and the total number of export-related jobs.1 Since the Bank’s methodologies have been criticized by the General Accounting Office and its own inspector general, the Bank’s true influence is likely smaller.

Second, Ex-Im’s mission refutes itself. The Bank’s charter instructs administrators to extend assistance to projects that cannot find financing in private markets; these projects must also provide a reasonable chance of repayment. If a project cannot find private finance, it is probably too risky to repay the borrowed funds. But if a project has a good chance of repayment, it should easily find private finance. Any single project the Bank finances cannot meet both conditions of its charter.

This tension results in a bifurcation of the Bank’s portfolio: profit-generating projects, like those involving Boeing, make up for losses in other areas. Ex-Im supporters likewise can either argue that (1) the Bank makes strong profits for the Treasury, or (2) the Bank provides needed but risky finance to important export opportunities. But if the Bank is making profits, that is an argument for privatization. If the Bank is suffering losses, that is an argument for shutting it down. Neither scenario supports federal government involvement.

With these heavy caveats in place, I will now contribute to this conversation by providing contextual information about the Bank’s history, processes, and portfolio, adapted from a forthcoming Mercatus Research paper on the Bank that I coauthored with the Mercatus Center’s Andrea Castillo.

I will then consider the claims made by both Ex-Im supporters and critics. Specifically, I will examine the validity of arguments that the Export-Import Bank

plays a critical role in promoting US exports; maintains or creates US jobs; substantially benefits small business; levels the playing field for US companies that compete against foreign companies that receive benefits from their countries’ export credit agencies; and is a good deal for taxpayers.

I conclude that a close examination of its activities and outcomes shows that the Export-Import Bank does not meet the standards of its own criteria, and the facts do not support these popular arguments for the continued activities of the Bank.

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