What do we even need an Export-Import Bank for anyway?
In 2013, the U.S. economy exported $2.271 trillion of goods and services, a $60.8 billion or 2.7 percent growth from 2012.
In 2012, exports totaled $2.21 trillion, a $97.76 billion or 4.6 percent growth from 2011.
Yet, almost none of the increases were because of the Ex-Im Bank loans, which only grew $3.1 billion in 2012 and actually decreased by $8.5 billion in 2013 to $27.3 billion.
Even when the loans decrease, U.S. exports increase. In other words, they have almost no impact whatsoever on the growth of exports.
Yet, according to the bank’s charter, the Export-Import Bank of the United States is supposed to “facilitate exports of goods and services.”
It is doing nothing of the sort. In total, Ex-Im Bank authorizations only covered 1.2 percent of U.S. exports. What do exporters even need the bank for if 98.8 percent of exports seem to move just fine without federal financing?
The truth is, Congress could fail the reauthorize the Ex-Im Bank, and almost nobody would notice.
That is, except for Boeing, a company whose customers received $7.9 billion of loans to purchase planes and other equipment. That constitutes nearly a third of the bank’s total authorizations, earning it the moniker, the Bank of Boeing.
Boeing’s Vice President of Communications, Sean McCormack spuriously claimed on April 9 that the bank helps “keep U.S. companies competitive in the global economy and sustain jobs in the U.S. The Export-Import Bank is an important competitive tool for U.S. exporters, large and small, to facilitate the sale of U.S. goods and services. It is imperative that the Bank be reauthorized in a timely manner. With over 60 export credit agencies around the world actively supporting their exporters, allowing Ex-Im to lapse would be akin to unilateral disarmament.”
Yeah, right. If Congress pulled the plug on the bank, either the company could set up its own financing or work with a financial institution to provide credit on favorable terms to Boeing customers.
Even if the deal would not be at as low of an interest rate as what the feds provide, who cares? What does the government have to do it for? Why can’t the market determine lending rates?
Moreover, only covering 1.2 percent of exports, this has almost nothing to do with the overall competitive posture of U.S. exporters.
The only question is why the heck are House Republicans led by Majority Leader Eric Cantor (R-Va.) even considering reauthorizing such an unnecessary program?
In 2012, the House had an opportunity to put a stop to the corporate welfare. They blew it, by not only reauthorizing the Ex-Im Bank, but by adding $40 billion to its lending capacity.
In total, 147 House Republicans voted for the measure, including Cantor.
Members like Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas), who opposed the measure, were the exception. That is significant because the House Financial Services Committee is the one committee that is supposed to consider the legislation.
But perhaps House leaders will just do what they did with flood insurance and skip Financial Services over Hensarling’s objections, setting the basis for another floor vote.
Only this time, the political costs of reauthorization are perceived to be higher. For now, Cantor spokeswoman Megan Whittemore has said, “The majority leader defers to the committee to review the program and take the legislative steps that they believe are appropriate based on their review.”
Meaning, there is actually an opportunity to defeat a federal program for once. The only step that should be taken in this case is to defeat reauthorization. Hensarling is going to need all the help he can get.
Robert Romano is the senior editor of Americans for Limited Government.
