Thirty-one governors, including Deval Patrick of Massachusetts, urged congressional leaders last week to re-authorize the U.S. Export-Import Bank (Ex-Im) before its charter expires in September.
Conservatives in Washington argue that the bank is putting taxpayer money at risk for a purpose better addressed by the private sector, but state leaders of both parties recognize that it plays a vital part in meeting the needs of firms that export goods and services to global markets.
The 80-year-old Export-Import Bank borrows money from the Treasury and uses it to help American companies sell abroad by offering low-cost loans to foreign buyers or guarantees against potential losses by exporters. The bank authorized $27 billion in credit during 2013 to support an estimated $37.4 billion in U.S. export sales, including aircraft, power-generation equipment and other projects while returning $1.06 billion in interest and fees to the Treasury.
As Joe Nocera pointed out in a recent New York Times column, the private sector does just fine in 98 percent of American export transactions. But then there’s the other two percent – the small business that wants to expand abroad but can’t find a bank to take a risk on a firm with little experience in the international marketplace; or the mid-size manufacturer for whom financing insurance by the US government is necessary because foreign competitors can offer prospective buyers financing from their governments.
Export data provided to AIM by the U.S. Chamber of Commerce and the National Association of Manufacturers underscores the use of Ex-Im services. Last year, the Ex-Im Bank helped 3,413 small companies across the nation start or expand their export business – and also helped the largest US exporter, Boeing, land aircraft sales against Airbus. In the Bay State, 57 exporters, most classified as small businesses, received assistance from the bank to facilitate more than $749 million in exports.
The primary importance of the Ex-Im bank is for companies with sales from $2 million to $20 million whose banks worry about accounts receivable from international sales. As one lawmaker and former manufacturer said recently, “An exporter can pay a fee to the Ex-IM Bank and get account receivable insurance. Without the Ex-Im some of our business would be all but impossible.”
In other words, the Ex-Im Bank exists precisely because the markets aren’t perfect. It supports American business competitiveness in global markets, and makes a profit for the taxpayer. Timely reauthorization should not be held hostage to ideological purity.