New research trumpets the benefits of U.S. exporters as job creators. Still, some in government would have The Export-Import Bank of the United States that supports them eliminated. It is the official export credit agency of the United States. Their mission is to ensure that U.S. companies — large and small — have access to the financing they need to turn export opportunities into sales. Ex-Im Bank does not compete with private institutions. They fill gaps in the trade finance market by working with lenders and brokers to ensure that U.S. businesses get what they need to sell abroad and be competitive in international markets.
The commerce department reported soaring durable goods figures powered by Boeing plane orders. While great news for U.S. manufacturing, this growth could potentially come under threat if Congress can’t pass reauthorization for the Export-Import bank. Boeing and General Electric are in this mix too.
Sounds pretty innocuous, however the debate over the Ex-Im bank is highlighting yet another intractable divide between Republicans and Democrats in Congress. Democrats, including President Obama, and centrist Republicans see the bank as a necessary financial component for American companies to compete with foreign competitors. Without financing provided by the Ex-Im bank, the fear is U.S. companies will lose out on sales to foreign firms who have their government’s support. Republicans, especially those in the tea party wing, consider the bank a creation of crony capitalism that only assists companies that dole out favors to politicians.
While those who are against it have the principled right to be skeptical of any kind of government intervention in the marketplace, the fact of the matter is “there’s never been anything called the ‘free market’ absent government activity and if we can do something that helps sponsor business with limited costs, we should be doing more of that not less of it.”
Voters may find it hard to argue with that logic, or at least that’s what Democrats are hoping hoping come November.
Supporting exports and exporting businesses in the U.S. should be a no-brainer. Exports boost our overall economy, which leads to stronger businesses and more job growth.
But Congress is currently debating the fate of the U.S. Export-Import Bank, the 80-year old institution that provides a variety of credit and financing opportunities to businesses that export. And as budget talks in Congress kick into high gear, conservative Republicans are angling to close the bank as part of the process, seeing in it an example of government waste and handouts to big businesses. The bank’s charter, which expires periodically, was last renewed for two years in 2012.
Politicians and experts of all stripes have bemoaned for decades the endless slide into obsolescence of U.S. manufacturing as developing countries, primarily China, have become factories to the world. For anyone who wants to support U.S. manufacturing, it’s clear one way to do that is to support exporting businesses.
As for the specific state data, Texas is far and away the leader, creating 16 percent of the toatal number of export jobs, and 17 percent of manufacturing jobs related to exports. There’s no small irony that some of Texas’ politicians are leading the charge to close the Export-Import Bank, which itself directly supports more than 1.2 million jobs, according to the bank.
Among the most vocal opponents of the Ex-Im bank is Jeb Hensarling (R., Texas), chairman of the House Financial Services Committee, who says the agency wastes taxpayer money and is an example of corporate cronyism, primarily because some very large businesses such as Caterpillar and Boeing also benefit from the bank’s financing programs. Hensarling reportedly rejected a short-term reauthorization agreement proferred by House Speaker John Boehner (R., Ohio).
If you delve in deeply, what you will find is the U.S. companies who benefit from this tend to be some of the largest, most well-financed companies in America–like Boeing…most of these companies could finance exports on their own.
While that may be true, the Ex-Im Bank also supports plenty of small businesses lacking the same means. According to Pritzker, between 2007 and 2014 the bank helped a total of 7,409 exporters, nearly 5,000 of which were small companies. Just as critical, 60 countries around the world have export banks that support their exporting businesses. China alone has three such banks, which support more than 10 times the financing our own Ex-Im bank does.
Eliminating the Ex-Im bank would damage U.S. global competitiveness, and harm the many small businesses that depend on foreign markets to export their goods and services. Just ask Texas manufacturers about that.