November 2017

Discussion on the merit of the Export-Import bank is one of those political issues that seems to bring out strong, polarizing opinions by those who are familiar with the bank and it’s functions. Looking outside of those that follow economics and politics closely, the average citizen actually has little knowledge on what the bank does. There are explainer articles titled “Stop pretending you know what the Export-Import Bank is” and Anderson Cooper stopped a presidential nominee debate between Bernie Sanders and Hillary Clinton to explain to viewers what the export-import bank was, saying, “in case everybody isn’t as wonkish as all of us on the stage here.”

The Export-Import Bank, commonly referred to as the “Ex-Im bank”, is a government agency that exists to help American small businesses compete internationally. They do this by providing loans for companies that could not get backing from the private sector. They are an export credit agency, the safety net of insurance that the customer will receive their product and the company will receive their payment. Risk involved with doing business globally is drastically reduced, helping open up the international playing field to small businesses across the country.

Banks like Ex-Im are not unique to the United States, there are more than 80 export credit agencies, or ECA’s, across the world, and nearly every major country has one. In the grand scheme of things, it seems it would be expected of the United States to have an ECA to match the rest of the global super power countries and give our own businesses as much as a matching step-up as we can, but in fact many right-leaning, and a few left-leaning, people vehemently criticize the bank and think it should be abolished. In theory, the logic behind the bank seems sound, but many people seem to disagree on the effectiveness on the bank. There has been much dispute on the specific numbers, Ex-Im bank claims it will earn $1.4 billion per year in the next decade, while the Congressional Budget Office, factoring in a different calculation of how market risk is assessed, says it will increase our deficit by $2 billion over the next decade. The main argument for the shut down of Ex-Im is exemplified by the “Bank of Boeing” nickname critics began calling the bank, criticizing it’s support of the large airline exporter, Boeing, when it was created to help small businesses. Advocates of the bank claim the criticism to be unfair

and stem from a lack of understanding of Ex-Im. The only thing to be sure about is across the board, Ex-Im remains an extremely polarizing topic depending who you ask.

Eric Petersen, a policy analyst at AFP, says, “Boeing has no trouble accessing financing, taxpayers should not be supporting their exports to our supposed competitors.” This voices the argument that the taxpayer pays for Ex-Im. An Ex-Im supporter would argue back that the bank is actually independent and self-sufficient, it’s interest rate covers the operational costs, not costing the taxpayer any money. All of this, of course, goes back to the numbers and who has the right ones, as the dispute remains over the correct way to factor in market risk.

Even Bernie Sanders, an unapologetically leftist politician, sides with the majority right-wing criticizers and argues Ex-Im is “picking winners and losers” and accuses the bank of cronyism.

Policy analysts, politicians, and economic experts argue about the intricacies and specifics of the bank and it’s efficiency endlessly. The story is different though among many small business owners, who also consider themselves proficient in understanding how the Ex-Im bank works. They, understandably so, see the Ex-Im bank through a much smaller lens of “How is the bank helping me, individually?” They see the bank in action, and have first-hand knowledge of being helped, or seeing colleagues being helped by the services of Ex-Im. A baby clothing company in New York, Cozy Cocoon, does nothing but sing Ex-Im’s praises, pointing directly to Ex-Im as the reason for new clientele. Ex-Im made them $34,100 dollars since 2014, and supports two of their jobs.

Michael Nicoletta, small business owner of a jewelry boutique, also sees Ex-Im as incredibly worthwhile. “The goal of every small business is to expand, and the wall you hit when trying to connect with a potential client outside of America can be pretty much insurmountable. If we want jobs to stay here, if we want our businesses to thrive, our economy to do well, we need the Export-Import Bank to help us get over that wall.”

The heart of each side, for or against the continuation of the Ex-Im Bank, seems to always just come down to the timeless and unsolvable debate on how much government should be involved with the market. The only certainty of the bank’s future is that there will always be avid supporters and criticizers, across all spectrums.