Another excellent article from Tim Carney. If you really want to understand the politics of the Export-Import Bank you need to read it.
Not renewing Ex-Im is a good start. But just a start. (And we’re not even there yet.) The bank is just the first of the crony programs which need to be unwound in the months and years ahead.
Ex-Im subsidizes U.S. exports through a few different financial products that all have one thing in common: they put the U.S. taxpayer on the hook if a foreign customer fails or refuses to pay back a loan. In Fiscal Year 2013, Ex-Im extended $27.3 billion in financing.
Ex-Im’s biggest product is the long-term loan guarantee. Over the past three fiscal years, such guarantees made up $52.6 billion of the agency’s $95.9 billion in financing. A fairly typical guarantee is the one that the Ex-Im’s board of directors approved on August 22: Virgin Australian International Airlines was buying a new batch of Boeing jets and Canadian TD Bank was providing the financing, in the form of a 20-year loan to the Aussie airline. This looks like a regular market transaction until the Ex-Im Bank steps in to guarantee the loan, meaning that if Virgin Australian fails to pay back the Canadian lender, U.S. taxpayers cover the bank’s loss.
The long-term loan guarantee program is mostly a subsidy program for Boeing. Of the agency’s $52.6 billion in loan guarantees over the past three years, more than half has covered Boeing sales.