Recently, there has been a growing debate on Capitol Hill whether the Export-Import Bank of the United States (Ex-Im) should be reauthorized, whose current authorization expires at the end of the fiscal year. Opponents consistently use the term “corporate welfare” to scare legislators and their constituents into supporting the elimination of this critically important federal agency.
Recent numbers show that the U.S. economy is still in the midst of stagnation. GDP dropped 2.9 percent and those who have simply given up looking for work significantly overshadow the miniscule monthly job creation numbers. Too often, daily news reports highlight how out of touch and inefficient the federal government appears to the average citizen. All one has to do is to think of the recent “scandals” involving the widespread delaying of services within the VA, the targeting of conservative groups and the failure to save emails by the IRS, and HHS’ inability to design and implement a functioning website. With each day’s news, the public’s trust in Washington to function further erodes.
Critics claim that Ex-Im’s role should be handled by the private sector, which should be able to handle these transactions. Claims of “corporate welfare” are thrown around often without a basic understanding of how Ex-Im actually operates. In the global economy, competition is fierce. Nearly 60 other countries support their business community by providing funding and supporting programs similar to Ex-Im. China, for example, financed more than $100 billion in exports in 2013. South Korea, which has an economy that is less than one-tenth the size of the United States, also finances more than $100 billion per year to support exports. For American companies to compete on a “level playing field,” the continued support of Ex-Im is not only vital, but a necessity.
Ex-Im carries the “full faith and credit of the U.S. government” and only has a 0.237 percent default rate. Every commercial bank would love to have that low of a default rate. In fact, over the past few years, Ex-Im has returned more money to the U.S. Treasury than it has spent through its operations budget. FY2013 saw Ex-Im contribute $1.057 billion after covering its exposure and loan reserves. Ex-Im has also improved its efficiency, today 89 percent of its transactions are handled within 30 days and 98 percent are handled within 100 days. For long-term transactions, Ex-Im has improved its processing time from an average of 163 days in FY2009 to just 88 days in FY2013. The significant improvement to the Bank’s efficiency comes at a time when the rest of the federal government is the model of inefficiency.
A wide-range of business and community organizations support reauthorization. The U.S. Chamber of Commerce, the National Association of Manufacturers, as well as local groups such as the Economic Alliance Houston Port Region, are among those supporting reauthorization. They understand the benefits of Ex-Im financing.
The opposition, led by Rep. Jeb Hensarling (R-Texas), chairman of the Financial Services Committee, refuse to accept reality and the facts and instead uses the phrase, “corporate welfare,” in reference to Ex-Im. As a Houston Chronicle recent editorial stated, “Short-sighted. Ill-advised. Unfortunate. Take your pick; all three adjectives apply.” Do companies such as Boeing, Caterpillar and General Electric utilize Ex-Im support? Of course they do, and in the process hire thousands of suppliers who employ thousands across the country. So not only does Boeing win with a new aircraft sale, its suppliers and local communities benefit.
According to the Bank’s website, for 2013-14, the Bank supported 465 exporters, including 261 small businesses in Rep. Hensarling’s home state of Texas. These companies exported nearly $6 billion of their goods to countries such as Mexico, India and Colombia. Does Rep. Hensarling not support his own constituents?
Today’s perception of Washington is the definition of dysfunction and inefficiency. Ex-Im is an agency with a proven track record, which actually works. Its function is to support American jobs by increasing exports, something desperately needed in today’s economy. Why would some in Congress even consider eliminating one of the few government agencies that actually works? Ex-Im supports U.S. businesses, provides a necessary and valuable service, opens new markets to U.S. businesses, and sends money back to the Treasury. It must be reauthorized.
Ollison is the former chief spokesman for the Export-Import Bank. He is a public affairs and advocacy consultant. You can follow him @BoOllison.