Misconceptions on the “Ex-Im” Bank
Thursday, September 11, 2014on
I’m switching up blog posts this week to interject some information about a Federal issue of critical importance to the Upstate economy. Last week, I wrote that we would talk about how to help pro-business candidates in this election. I’ll cover that next week because Congress is back in session, and for many Chambers of Commerce, attention turns to the reauthorization of the Export-Import Bank (or “Ex-Im” as you may have heard). This is a major topic of discussion on the agenda today in Washington at our Upstate Chamber Coalition National Issues Forum. Our two largest Upstate Chamber Coalition members have come out in support of the Ex-Im Bank – Greenville and Spartanburg. In the Upstate, we have a lot of economic activity tied to exports. Nearly 2,500 jobs and $385 million in exports are tied to the Ex-Im Bank in the Third and Fourth Congressional Districts. Critics decry the bank as more corporate welfare, but 85 percent of the bank’s investments are in small business. In the Upstate, most of the bank’s activity comes from smaller manufacturers. You can find out more about what businesses are supported by the Ex-Im Bank right here at home (listed by S.C. Congressional District) by clicking here. As a Chamber of Commerce, we are 1,000 percent behind the concept of the free market, the invisible hand, and capitalism. However, international reality dictates a more pragmatic approach. The international free market isn’t really free, and China, Germany, the United Kingdom, India, and most of our major trading competitors help finance their exports at a much higher level than we do. Let’s take a look at a few of the myths versus the facts on the Ex-Im Bank as Congress gets ready to start the debate: MYTH: Ex-Im Puts Taxpayers at Risk FACT: Since 1934, fewer than 2 percent of Ex-Im loans have defaulted. The Ex-Im Bank poses none of the risks to taxpayers that the government-sponsored enterprises in the housing sector did during the last decade. MYTH: Ex-Im is Corporate Welfare FACT: In 2012 and 2013, the Ex-Im Bank returned more than $1 Billion each year to the U.S. Treasury, and since 1990 has returned $7 Billion more than it received in appropriations. Providing export assistance to American companies is not costing the taxpayer a dime. The Ex-Im Bank works by providing credit to foreign customers so they can buy American exports and covers critical gaps in international financing. Many of these loans go to customers in developing countries where there may not be commercial financing. MYTH: It doesn’t matter if Ex-Im is not reauthorized FACT: Hundreds of thousands of jobs, and as many as 8,000 jobs in our state, are at risk. The Bank was last reauthorized in 2012 by overwhelming bipartisan votes in both chambers of Congress. Since that time, the Bank has more public oversight and is far more transparent than it was through much of its history. In 2012, Germany and France offered twice as much export support, China and India offered three times, and South Korea offered 10 times the amount of export support as we do. If we don’t reauthorize the Ex-Im Bank, it will be a big windfall to our foreign competitors. We hope the House and the Senate will reauthorize the Ex-Im Bank before the current authorization expires at the end of the month. We also applaud Senators Lindsey Graham and Tim Scott for voicing their support of the Bank this time around. If you’d like to voice your support for the Bank, please click here and find more resources. As always, if you’re a member of the Upstate Chamber Coalition, feel free to shoot me an email and I’ll be happy to answer any questions you have about public policy and elections.