Defunding the Export-Import Bank: A Subsidy for Finance, Not for Workers

Project 2025’s attack on EXIM frames the agency as corporate welfare that does nothing for net exports or workers. But this is a classic case of mistaking a distributional tool for a failure of the whole system. EXIM’s purpose is not to create jobs out of thin air—it is to ensure that U.S. firms can compete on a global playing field where foreign governments routinely lavish subsidies on their own exporters. When EXIM disappears, the jobs it supported don’t vanish into a net-zero sum; they simply move to Germany, China, or South Korea, whose export credit agencies are only too happy to fill the gap. That is a transfer of wealth from American workers to foreign treasuries, not a market correction.

The research bundle shows that EXIM supports only about 2 percent of U.S. exports, but that 2 percent is capital-intensive, long-cycle infrastructure and energy deals that private lenders refuse to touch. The 2015‑2019 quorum lapse proved the Cato/Mercatus critique wrong: U.S. exports and employment didn’t collapse because big exporters with access to capital markets stayed afloat—but small and medium-sized manufacturers in supply chains lost orders to foreign competitors, and the U.S. lost leverage in large-ticket export financings that foreign ECAs snapped up. A 2024 NBER working paper finds genuine additionality in those sectors where EXIM operates as a lender of last resort; the displacement effects are concentrated elsewhere, not zero-sum across the board.

The real distributive question is who wins when EXIM is defunded. Big multinationals that already self-finance will survive. Wall Street banks will earn fees arranging private financing for those that can pay. But the small tool-and-die shop in Ohio that supplies parts to a Boeing jet, or the solar component maker in Arizona that needs EXIM’s guarantee to break into an African market, will lose a cost-effective bridge. The public pays twice: once in lost export-driven jobs and once in the erosion of the Treasury’s ability to use EXIM as a foreign-policy lever (e.g., countering China’s Belt and Road lending). A progressive alternative isn’t to defend EXIM as it is, but to reform it: require the board to prioritize small and medium-sized applicants, cap subsidies for firms that can self-finance, and tie large deals to domestic labor and environmental standards—so the subsidy goes to workers and communities, not simply to shareholders of Boeing and Bechtel.