With all the suffocating legislation handed down to American businesses in recent years, why would our congressional leaders shut down legislation that actually promotes healthy job creation, and literally costs taxpayers nothing?
Congress is playing with fire when it attacks the export economy by shutting down the federal Export-Import Bank. The bank is a vital cog in our export system, providing loans and insurance to help American companies sell their products overseas. Despite its importance to the economy – the bank supported nearly $30 billion in exports last year – it is under assault from tea party leaders like Texas’ Jeb Hensarling and Ted Cruz, who think government has no role to play in helping American businesses succeed.
But they are ignoring the lesson of the last recession: The damage from shutting down the bank won’t be limited to exports; like the fallout from the housing bubble and the Wall Street crisis, it will spread like wildfire all across the nation.
It happened before. When bankers in New York and mortgage lenders in Florida and California ran wild a decade ago, it led to a massive recession that nearly sank our whole economy. The lesson is simple: America’s economy is so deeply interconnected and intertwined that developments in one part of the system quickly and powerfully affect the rest.
Ex-Im is not some rogue, wasteful agency. The opposite is true. Ex-Im is one of the smallest federal agencies out there. It is a cautious lender, with strict underwriting rules and a default rate that is far lower than that of private banks. The bank pays for its own operations out of interest and fees on its services, and most years actually runs a surplus as one of the few federal agencies that makes money for the taxpayer. Over the past two decades the bank has generated $7 billion in revenue above and beyond its operating costs.
And its value to the American economy is enormous. The bank has made about $300 billion in export sales possible since 2007. Do bank critics really want to hand the next $300 billion worth of Ex-Im deals to our rivals in Germany, China, and Japan? Do they want to give pink slips to the 164,000 American workers whose jobs depend upon the bank each year?
That is exactly what will happen if Congressional leaders don’t re-authorize the bank, which has been sitting idle since June while House leaders refuse to allow a vote on its fate. Every other major industrial country operates an export credit agency like Ex-Im to make sure its manufacturers can get the credit they need to do business in unfamiliar and far flung markets. In fact, Ex-Im pales in comparison to its rivals – as a share of GDP, France offers triple the export financing, Germany 10 times as much, and South Korea 35 times as much! Our rivals in these countries are licking their chops at the prospect of Congress shutting down the Ex-Im Bank and U.S. businesses being forced out of the market as a result.
Critics offer mostly ideological objections to the bank, slurring it as “crony capitalism” or arguing that it distorts private markets or picks “winners and losers” in the economy. But those dramatic talking points bear no relation to the plain vanilla reality of the Export-Import bank.
It’s hard to know what makes something “crony capitalism,” but the bank’s services are available on equal terms to all American businesses trying to break into markets overseas. That’s no kind of cronyism as I understand the term.
And the bank doesn’t distort private markets; it helps them work better by filling gaps when the ordinary financing system lacks the expertise to evaluate transactions crossing national borders. All Ex-Im transactions are private sales between free market participants, and the only “winners” are American businesses and workers they employ.
The only practical criticism most bank opponents offer is the charge that large companies like Boeing and GE use the bank, and they don’t need the help.
But that too ignores the basic truth about the interconnectedness of our economy. Every time Boeing exports a 747, for example, that plane includes electronics made by my company, AirBorn Inc., along with other parts and components made on a vast, nationwide supply chain made up of 15,000 small and mid-sized firms. Maybe Boeing can weather a shutdown of the bank, but the small businesses that make up nearly 90 percent of its transactions cannot.
While Congress remains laser focused on the large companies like Boeing and GE who use the Ex-Im Bank, congressional leaders continue to ignore the fact that small and mid-sized firms like AirBorn also directly use the Ex-Im Bank to help our expansion into global markets. AirBorn is a mid-sized employee-owned company. Shutting down the Ex-Im Bank greatly limits our ability to continue our growth and job creation.
Texas leaders should put our economy first and abandon their reckless campaign against the Ex-Im Bank. Members of Congress are back at work in Washington this month after a summer hiatus in their home districts; they should make sure Ex-Im reauthorization gets an up or down vote as soon as possible.
Cindy Lewis is president and CEO of AirBorn Inc., which is headquartered in Georgetown, Texas, and operates a manufacturing facility in Addison.