Friday, July 17, 2015

White House Confirms Negligible Impact of the Ex-Im Bank on Exports

By Veronique de Rugy of Mercatus. Excerpts:
"There is, however, one crucial place where the Ex-Im Bank figures and the White House data are consistent. They both show that the Ex-Im Bank supports a trivial share of exports, small businesses, and exporters in each state. Indeed, in the vast majority of cases, exporters sell their products overseas the good, old American way—without a government handout.

The first chart uses data from the White House dataset and the US Census Bureau’s US International Trade in Goods and Services Annual Revision for 2013 and 2014, their annual Profile of US Importing and Exporting Companies, and the International Trade Administration’s Jobs Supported by Export Destination Excel Data. It shows that in 2014, even with an inflated value of export value supported reported by the White House, the Ex-Im Bank backs only 1.9 percent of all exports. Also, the Ex-Im Bank backed a tiny 0.28 percent of all small business exporters and only supported 0.42 percent of all US exporters. Needless to say, without the Ex-Im Bank, American exports will not collapse."

"During 2009 and 2014, Washington State was the big winner in terms of state export value supported, with an incredible 26.04 percent of state’s exports backed by the Ex-Im Bank. That should come as no surprise. Washington State is the home of Boeing, the bank’s main beneficiary in the United States. Not surprisingly either, the number of exporters supported by the agency was very small: 0.28 percent of exporters in Washington State were supported by Ex-Im.

The state percentages drop off quickly from there. While 3.36 percent of Michigan’s and Wisconsin’s exports and about 3.15 percent of Connecticut’s exports were backed by the Ex-Im Bank, the Ex-Im Bank supported less than 2 percent of the exports in most other states between 2009 and 2014. In other words, the Ex-Im Bank backs a negligible fraction of most state exports. A vast majority of exports in each state take place without any assistance from the government. But taxpayers in all states remain on the hook if the Ex-Im Bank runs into financial trouble.

As for the number of exporters supported by the Ex-Im Bank between 2009 and 2014, the numbers are even smaller. Louisiana was the big winner in terms of exporters supported, with a tiny 0.58 percent. All the other states, including Washington State, show an even smaller share of Ex-Im supported exporters.

The small business numbers show the same pattern. Oklahoma tops the list of small business exporters supported by the Ex-Im Bank with minuscule 0.46 percent.

In short, the White House’s effort to use its bully pulpit to save the Ex-Im Bank unwittingly confirms the negligible effect the agency has on the exports and exporters and further confirms that the sky will not fall if the bank is never reauthorized."

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