One of the (well-deserved) criticisms of both parties has been their utter inability to cut anything substantial from the budget (anyone remember the continuing resolution that ended up doing far less than its original modest goals?)
Fortunately, there are a number of analysts in town who HAVE been taking a hard look at what can be cut from the budget – and my friend Sallie James at the Cato Institute has a great new paper that gives one such example.
In “Time to X Out the Ex-Im Bank,” Sallie takes aim at the Export-Import Bank of the United States, and makes a compelling case to cash out taxpayers’ role.
The Export-Import Bank of the United States picks winners in the U.S. economy, redistributing resources from the productive sector to its chosen clients. While it has been self-financing for a number of years, taxpayers remain exposed to tens of billions of dollars of loans and guarantees. The Ex-Im Bank cannot, and does not, significantly affect the net number of jobs in the economy or the trade balance. Only a very small proportion of U.S. exports are supported through Ex-Im Bank activities.
The Ex-Im Bank claims to correct market failure, but it introduces distortions into the economy and inserts politics into what should be purely commercial decisions. By diverting resources from the private sector, the bank’s activities produce a less-efficient economy and lower general standard of living than would occur in a free market for export finance.
Let’s be honest, you can’t throw a rock in most cities without hitting a bank – yet the federal government has deemed this (yet another) endeavor that it simply MUST undertake. As Sallie so succinctly states, “if the bank’s transactions were “sure bets,” then the private sector would — and should — be expected to step in. If, on the other hand, the private sector wouldn’t finance a transaction, it is a signal that taxpayers should not be exposed to the risk, either.”
It’s time to get the feds out of the banking business in a lot of ways – auditing the Fed, preventing another round of Quantitative Easing (aka “printing money”), no more bank bailouts, etc – but until we get to that point, let’s terminate this silly program.