What independent agency has supported millions of jobs, enjoyed support from Republican and Democrat presidents alike over its 81-year history and doesn't cost taxpayers a dime, actually earning billions of dollars in revenue for the U.S. Treasury? The answer is the U.S. Export-Import Bank, a little-known entity that has stepped into the spotlight this week.
Even the most ardent newswatchers may have been caught off guard this past weekend when the reauthorization of the Export-Import Bank caused a heated debate in the U.S. Senate. Sen. Ted Cruz called Senate Majority Leader Mitch McConnell a liar for bringing the matter to a vote — as an amendment to a long-term transportation funding bill. The amendment passed the Senate, 67-26, breaking what had been a filibuster against the agency's reauthorization.
The "EXIM Bank," as its commonly known, helps finance or insure some foreign purchases of U.S. goods. That it could stir such passions within the GOP seems ludicrous on its face. But the bank's defeat has been a cause celebre for the tea party wing as well as some of the conservative moment's biggest backers including Charles and David Koch and the Club for Growth. They see the bank as the kind of government intervention into the marketplace — the so-called picking of winners and losers — that they decry as self-defeating corporate welfare.
But that criticism not only fails to recognize the agency's record of success — an estimated 164,000 jobs created in fiscal year 2014 alone by helping underwrite $27.4 billion in U.S. exports (the vast majority of the transactions helping small businesses) — but ignores the reality of government involvement in the global marketplace. The vast majority of U.S. competitors in international trade offer similar government-backed loans so that foreign customers can afford to buy their exports. Will Russia or China stop providing that credit to purchasers if the U.S. no longer offers it? Not likely. Killing the EXIM Bank amounts to unilateral surrender.
And it's already happening. The bank lost its lending authority on June 30 when its reauthorization expired. Now, it's reduced to simply completing and servicing existing loans. That's entirely unhelpful to U.S. trade interests. This country continues to import far more than it exports (the monthly deficit reaching $42.7 billion in May), and denying customers the ability to pay for U.S. goods is only going to make matters worse.
In a perfect world, the purists might have a point about corporate welfare. But that's a matter worthy of trade negotiations. Within the U.S., states offer government-backed incentives to encourage business development all the time — including in Senator Cruz's home state of Texas. And you likely won't see the Lone Star State giving up those incentives and thus surrendering those jobs to Oklahoma or Arkansas any time soon. Why are the jobs tied to the EXIM any different?
Arguments that the bank might go bankrupt and prove costly to American taxpayers doesn't hold much water either. Not only has it been in business since Franklin D. Roosevelt was president but its default rate as of Sept. 30 was 0.175 percent, which would make it the envy of the private sector. Are there examples of EXIM loans helping one American company at the cost to another — as when Delta claims loan guarantees for Boeing jets inadvertently helped its foreign rivals keep down costs? Most likely, yes, but should the country sacrifice aerospace manufacturing for the sake of laissez-faire purity? Without the loan guarantees, Delta would be the winner and Boeing a loser, and the U.S. trade imbalance would grow worse for it.
Admittedly, the Export-Import Bank doesn't drive trade — it's loan inventory may seem large but it's puny compared with overall exports. But the potential jobs that would be sacrificed if the bank is not reauthorized are quite real. It's also troubling to watch so many Republican presidential candidates within the Senate line up against the bank (Sens. Cruz, Marco Rubio and Rand Paul versus Sen. Lindsey Graham, the sole candidate on the bank's side) with so little concern for the hundreds of thousands of jobs involved. The EXIM Bank is a success story, not a pariah. Whether the means to its resurrection should be the transportation bill (which is flawed for reasons other than inclusion of the bank's reauthorization) is another question. That the issue splits the Republican Party is a trivial concern compared to the livelihoods at stake.